Wrapped crypto tokens are contributing to the Bitcoin rally

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Wrapped crypto tokens are contributing to the Bitcoin rally

Bitcoin price has risen in the past few weeks. One of the main culprits for this trend is wrapped crypto tokens

The Bitcoin is currently recovering and working at a level he had reached last year the 2018th The price of the leading cryptocurrency is currently trading around $ 13,500 in the region after hitting the $ 14,000 mark a few days ago.

According to Bloomberg , Bitcoin is supported by supporters of its biggest rivals. Proponents of decentralized financial or DeFi applications use the Bitcoin as collateral cryptocurrency in the Ethereum - block chain .

DeFi tokens have caused quite a stir in the cryptocurrency space, with massive gains in the third quarter of the year. Although the DeFi fever had subsided in recent weeks, DeFi tokens are still making an important contribution to the crypto market.

With DeFi, people can borrow and lend money without intermediaries. Wrapped Bitcoin (WBTC) is used on numerous platforms for DeFi purposes and has played a tremendous role in the rise in the price of Bitcoin. Users put the coin on popular apps like Compound and earn massive returns in the process.

BitGo is one of the most popular platforms that WBTC are available on. Investors deposit BTC with BitGo, the provider then stores the funds in a central depository and thus invests in DeFi apps. WBTCs are becoming increasingly popular in the crypto space. Earlier this month , we reported that the total locked-up value in wrapped bitcoin hit the $ 1 billion mark, which is nearly 0.5% of the total market cap in bitcoin.

BitGo's Chief Product Officer Chen Fang believes the total amount of wrapped Bitcoin could reach 10% of the coins mined in the next two years. Analysts and crypto experts now believe that WBTCs contributed to the bitcoin's price rally as people now have other things to do with the cryptocurrency instead of selling it.

Bill Noble, chief technical analyst for crypto researcher Token Metrics, said DeFi turned Bitcoin into one of the best securities in the world. This allows users to use coins instead of just selling them. Sam Bankman-Fried, CEO of Alameda Research, explains: "WBTC meant more electricity was flowing - from the DeFi boom to the BTC price."

According to Bankman-Fried, Bitcoin will play a major role in a DeFi-dominated future. Most crypto enthusiasts believe that decentralized finance will gradually supplant centralized financial intermediaries such as banks and other financial institutions.

The Bitcoin rally has been massive this year. The BTC started the year with a trading price of around $ 7,000 per coin. However, despite the Covid-19 pandemic that affected the growth of the global economy and financial markets, the price has increased by almost 100%. It will be exciting to see how the leading cryptocurrency will develop by the end of the year.