Bitcoin’s latest bull run has made history, with the cryptocurrency’s price touching never-before-seen levels day after day. In fact, the past 24-hours alone saw BTC surge to breach the $24,000-mark on some crypto-exchanges.
Following Bitcoin’s rally, a new all-time high (ATH) for Total Value Locked (TVL) in DeFi was also marked, with the same going close to $17 billion, at the time of writing.
However, according to crypto-trading analytics platform View Base, funding rates for altcoin perpetual swaps look overbought at the moment. What does this mean? Well, it is likely that traders FOMO-ed into altcoins after missing the Bitcoin pump, hoping to play catch up.
While Bitcoin rose by 25% over the past week, DeFi coins like YFI and AAVE were up by only 10%, a differential that suggests that DeFi tokens fell behind Bitcoin over the past week.
It is thus possible that uncertainty around how the U.S Treasury’s potential regulations may impact DeFi may have something to do with it. However, despite everything, most developments this week have remained largely bullish for Ethereum, the network upon which most of DeFi is built.
The world’s second-largest cryptocurrency by market cap touched a new price high for the year recently, trading at $676 on 17 December.
My hunch is BTC is a perfect collateral layer but ETH might be bigger in market cap terms in 10 years for the reasons above.
Money and collateral is just the base layer. Everything builds on top.
The store of value is collateral, the trust layer and exchange of value is bigger
— Raoul Pal (@RaoulGMI) December 11, 2020
In fact, according to some like Raoul Pal, ETH might overtake Bitcoin in terms of market cap in 10 years, with the analyst claiming that he sees Bitcoin as a store of value collateral base layer while ETH is the trust layer that provides for the exchange of value.
Another data point to consider when examining the potential reality of such a claim is the phenomenal growth in Wrapped Bitcoin (WBTC) this year. Since Bitcoin cannot be directly sent to the Ethereum blockchain, Bitcoin users have to convert BTC to wBTC to gain access to DeFi services running on Ethereum.
Wall Street too seems to be turning its attention to ETH as the CME Group recently announced the addition of Ether Futures to its institutional exchange, available from February 2021.
While the market needs to wait until the launch to fully gauge the impact of this on ETH’s price, positive market sentiment and interest remain prevalent today.