Ethereum Finally Catching Up to Bitcoin; DeFi Meanwhile Hits a New Record
This week, Bitcoin is flying, having surged 16.6% in value to hit a new 2020 high.
While the leading cryptocurrency has been enjoying an uptrend, altcoins have been either flat or in losses. That has been up until yesterday as finally some gains were recorded by altcoins.
Both of these coins are recording gains on the back of PayPal, announcing support for them along with Bitcoin.
Even DeFi tokens are reacting to the market exuberance after weeks of falling hard. HOT (23%), Kava (10%), Chainlink (8%), Curve (7%), and other popular ones are recording gains up to 5%.
While the price of DeFi tokens is still not keeping up with the large-cap coins, the total value locked in the sector has hit a new record of $12 billion, as per Defi Pulse.
Much like TVL, the amount of BTC locked in DeFi is also continuing its upward trend to 171k. Locked Ether is also hitting a new ATH at over 9 million ETH.
As for Ether price, which has been struggling to keep up with Bitcoin, it finally started running up yesterday, again thanks to PayPal also supporting Ethereum.
With an over 8% move, Ether price hit $400, a level last seen in early September. Up 200% YTD compared to Bitcoin’s just 76% gains this year to date, Ethereum is still lagging behind this time “badly.”
“I don't think ETH is ready just yet. ETH/USD still chopping at resistance but once it breaks $400, we're gonna see a huge spike up,” noted trader Crypto Squeeze. He added,
“ETH/BTC along with other alts are looking quite bad. Regardless of the BTC direction, I believe ETH/BTC ratio will be dropping once BTC moves.”
Usually, Ethereum leads the rallies, and Bitcoin Ethereum 20-day correlation of returns since 2018 has only broken down only twice during a BTC move up. The first time was in May 2019, and the one we are currently seeing. Trader and economist Alex Kruger said,
“ETH tends to underperform BTC,” but “When correlations break down, ETH tends to underperform BTC. Underperformance is naturally more pronounced during BTC upmoves.
BTC just began an upmove driven by dollar weakness (affecting all crypto) and treasury inflows (affecting BTC alone).”
He expects Bitcoin to continue its outperformance until December when the rally across risk assets will resume driven by government stimulus, a risk-taking appetite that will spill into the cryptocurrency market as well.