The skyrocketing Bitcoin price has vastly increased the value of digital gold on the Ethereum blockchain. But it’s also drawing tokens away.
BTC locked on Ethereum is actually down 10% from its mid-November peak, as BTC holders eye profit taking after the remarkable run up.
Bitcoin locked on the Ethereum blockchain is worth more than ever, but Bitcoin holders have started looking elsewhere to make the most of their investments.
More than $4.8 billion worth of Bitcoin is now locked on the Ethereum blockchain, a new all-time high and more than 4% of the total market cap of Ethereum, according to blockchain data provider Dune Analytics.
But it’s not because more Bitcoin has been flowing into the de facto DeFi blockchain—in fact, the number of BTC locked is at its lowest level since September of last year.
The source of the difference comes down to the surging value of Bitcoin that still remains locked in Ethereum, in a trend that may well continue if Bitcoin keeps shooting higher.
Bitcoin and Ethereum use entirely separate blockchains, but the rise of DeFi—shorthand for a group of peer-to-peer financial products—has attracted billions of dollars worth of BTC into cross-chain “wrapping” services.
Cross-chain transfers like Wrapped Bitcoin or renBTC allow Bitcoin holders to get in on the action without needing to sell their BTC holdings to buy Ethereum-based digital assets.
The number of Bitcoin locked on Ethereum reached an all-time high in mid-November of nearly 152,000, worth approximately $2.5 billion at a BTC price of $16,150 at the time.
The DeFi market is rising again, but the surging price of Bitcoin and Ethereum are hiding a trend that will need to be changed if the industry wants to keep growing. Total value locked i…
It’s possible, then, that the exodus of BTC from Ethereum is due to Bitcoin investors cashing out in search of profits on those holdings.
Source: https://decrypt.co/
