Bitcoin is trading for just over $36,000. Despite a recent $4,000 drop, the asset is still considered to be doing well by analysts and industry experts alike. However, the cryptocurrency is once again being outdone by several smaller coins, particularly those in the decentralized finance (Defi) space.
Defi Is Seriously Outdoing the Ranks of Bitcoin
Bitcoin has added roughly 300 percent to its price over the past year. It is the largest and most popular cryptocurrency by market cap, and has thus far been hogging most of the attention when it comes to the spectacular rises that have occurred within the confines of the crypto space since early 2020, but is this attention really justified? While the currency is in solid shape, it’s still being outdone by several of its tinier competitors.
The Defi space first came about has a means of introducing bitcoin and other cryptocurrencies for use in place of traditional financial tools. Thus loans, insurance and other items of similar natures could potentially be backed by bitcoin or other digital assets. The space has garnered heavy attention over the past two years and has grown like no other sector in the cryptocurrency space. In early 2020, Defi was valued at just under $1 billion. Today, the space is worth approximately $23 billion.
Seamus Donoghue – vice president at the Swiss digital asset startup Metaco – explained in a recent statement that continued government stimulus programs designed to assist average citizens battle the coronavirus and a huge influx of retail players in the crypto space are the primary reasons as to why the Defi space has grown to such unprecedented levels.
He comments that many of these players see old or traditional financial tools as outdated and incapable of assisting individuals on an extended scale, and thus Defi’s ability to potentially restructure the monetary space is growing more attractive each day.
Polkadot Is a Particularly Solid Option
While stimulus is on the cards, the macro backdrop will remain positive for risk assets like bitcoin, and going by the recent spike in Google searches, retail investors are also starting to ramp up crypto investment. This means that altcoins like Ethereum, Cardano, Polkadot and the Defi tokens will now likely start to outperform. The crypto market cap touching $1 trillion will see new institutional investors start worrying about FOMO (fear of missing out), which will in turn focus the slower moving pension and endowment funds to investigate investment opportunities in this emergent asset class.
In all, assets like Ethereum have risen by roughly 600 percent over the last 12 months, almost double the spike of bitcoin, while earlier last week, Polkadot rose to become the fourth-largest cryptocurrency by market cap, beating out assets like Ripple’s XRP and Litecoin. Since August, Polkadot has added almost 500 percent to its price.
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