The DeFi sector has seen massive gains this year, whilst helping to drive Ethereum’s price increase so far this year above its rival: Bitcoin
Ethereum is outperforming its rival Bitcoin so far this year. Ethereum’s price has risen by 90% compared to Bitcoin’s 30%. The naysayers will cite that Bitcoin is actually much closer to its ATH than Ethereum is at the moment, which is true.
However, it is important to look at why Ethereum is performing the way it is. This is because to understand the reason behind its price movement threatens to undermine the maximalist’s ATH argument.
The DeFi market is helping to drive Ethereum’s price up so drastically, having just today exceeded $2 billion dollars in market cap. What is particularly striking, is that it only reached $1 billion about two months ago.
Ethereum benefits from the success of the DeFi market because it runs on the Ethereum network itself. By being able to make use of smart contracts, DeFi companies can offer services directly to customers without the need for a third party. Thus making the process trustless and completely secure.
Ethereum based DeFi tokens benefit too
Many DeFi specific, Ethereum-based coins have reported eye-watering returns so far this year. Coins such as Aave’s LEND coin has seen a price increase of 287%.
Whilst these coins are enjoying the benefits of an increasingly attractive sector within the crypto sphere, their impressive returns so far this year are in turn attracting more people’s attention to the space. Thus having a compounding effect on the price’s movement.
Comparisons could easily be drawn to the altcoin boom of 2017, however, this occurred with the backdrop of Bitcoin’s huge bull run, which took it to its ATH. Recently, it is no secret that Bitcoin has been struggling somewhat break free of $10,000. Yet, still these impressive gains have been made by Ethereum.
It seems clear that the idea of DeFi is much more tangible to people as it offers real value, even during a period where Bitcoin is not outrightly bullish. If anything, it poses the question of: what will the increases look like when Bitcoin and Ethereum’s prices break free next time?
Therefore while the DeFi sector has been outperforming the two major cryptocurrencies of Bitcoin and Ethereum, the latter benefits from such success much more profoundly than the former. Lastly, with the rollout of Ethereum 2.0 imminent, the DeFi market could be set to double its market cap once again very soon.