Bitcoin locked in DeFi doubles just weeks after Maker vote
Wrapped Bitcoin (WBTC) has found new life thanks to its new use case as collateral on the Maker platform.
The number of Wrapped Bitcoin has more than doubled since the cross-chain currency was added as a collateral option on the Maker protocol. Total Bitcoin locked rose from about 1,000 to nearly 2,300 since the Maker proposal was passed, with more Bitcoin locked in under two weeks than all that were locked since the WBTC launched in January 2019. The total value locked reached an all-time high of $22.45 million on May 14.
The inflows show there’s been a massive renewal of interest in WBTC, and in unlocking the growing liquidity trapped on the Bitcoin chain.
The Maker protocol uses smart contracts to issue and manage loans of dollar-pegged DAI tokens backed with cryptocurrency as collateral. Maker has gradually added cryptocurrencies to be used as collateral for loans, including the most recent decentralized governance vote to add WBTC earlier in May.
WBTC represents one of a number of different approaches to transferring Bitcoins onto the Ethereum blockchain. The WBTC platform, which requires trusted third parties to facilitate the transfer between blockchains, is a collaborative project between Maker, Compound, Kyber and other major DeFi players.
Notably, the amount of ETH locked in Maker loans fell by 8% between May 10 and May 13, indicating some existing loan holders may have been eager to add WBTC as a way to diversify their collateral accounts. More diverse collateral holdings are important because they spread out the risk of a drop in value of any one asset.
The new Bitcoin moving to Ethereum has not seen the same spike on the competing Lightning network. This could be a signal that users are not seeking faster transactions so much as greater liquidity and a more robust financial ecosystem.
In just a few short weeks, WBTC has shown all it needed was a viable use case to attract more attention than had ever been seen before. This could be interpreted as a metaphor for DeFi itself, which may be just one one killer app away from bringing users flooding into one of crypto’s fastest growing sectors.
Author: Decrypt / Alexander Behrens
Elon Musk puts “Bitcoin fortune” in Twitter discussion with J.K. Rowling open
Tesla founder Elon Musk puts in a Twitter conversation with Harry Potter Autroin J.K. Rowling is open that he only owns 0.25 bitcoin.
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As part of a Twitter discussion with Harry Potter author J.K. Rowling apparently uncovered the "value" of his Bitcoin assets.
After Rowling asked on Twitter that the crypto community please explain Bitcoin (BTC) to her, Musk got involved. The founder of Tesla said: "The inflationary monetary policy of the central banks makes even the internet money Bitcoin look good."
Whereupon he added:
"By the way, I still only have 0.25 Bitcoin."
Tyler Winklevoss then asked Musk, who is also the managing director of space company SpaceX, "How are you going to pay anything on Mars?"
However, there are also doubters who question Musk's statements. Accordingly, crypto investor Alistair Milne replies: "This is pure data protection, something that every Bitcoin owner should deal with … Too bad I lost all of them …"
The Twitter user named @Bitcoin meanwhile addressed himself directly to Rowling and tried the Harry Potter mother in an understandable way to clarify one of the basic advantages of Bitcoin:
“Wizards still have to use the Gringotts bank. Bitcoin solves this problem. ”
How credible Musk's words are is unclear, since he had already drawn attention to himself in early May with a number of dubious tweets. In the process, he had indicated that he wanted to sell almost all of his possessions.
In addition, he had indicated last year that Tesla could possibly enter the mining business, which makes his new statements all the more surprising.
Market Wrap: Bitcoin Stuck in High $9K Range as Stocks Soar on Powell Comments
May 18, 2020 at 20:52 UTC
Bitcoin treaded water in the high $9,000 range Monday as stocks rallied and traders wondered when the cryptocurrency would break the five-digit barrier again.
Stocks, meanwhile, got a boost a day after Federal Reserve Chair Jerome Powell talked about continued stimulus efforts for the U.S. economy during a television interview Sunday.
At $9,673 as of 20:30 UTC (4:30 p.m. ET), bitcoin (BTC) was trading down less than a percent over 24 hours. The largest cryptocurrency by market capitalization was close to its 10-day and 50-day moving averages, a technical indicator signaling the price is likely to remain flat in the near term.
While bitcoin hit $9,958 in early trading on exchanges like Coinbase, it dropped as low as $9,436 and has climbed as high as $9,700 since 16:00 UTC (12 p.m. ET).
Bitcoin briefly topped $10,000 on May 7 but has not reached such heights since. However, traders are eagerly awaiting a return to five digits because would signal positive momentum, said Josh Rager, a crypto trader and founder of learning platform Blackroots.
“Bitcoin performed well starting in late April, right before halving, so you can’t expect it to keep running up without some proper sideways action,” Rager said, referring to the much-anticipated, once-in-four-years reduction in regular issuance that took place May 11. “I think if bitcoin can get a close on the daily or weekly above $10,500 that it would be very bullish.”
As bitcoin ambled along, the big boost to the stock markets took center stage Monday. The exuberance, irrational or otherwise, seems to have come thanks to Fed Chair Powell, who said the U.S. will continue to take unprecedented action to thwart the economic damage from the coronavirus pandemic.
“The good news is that we have policies that can go some way toward minimizing those effects,” said Powell during a television interview with “60 Minutes.” “And that’s by keeping people and businesses out of insolvency just for maybe three or six more months while the health authorities do what they can do.”
“We can buy time with that. And so I think that kind of support may be appropriate,” Powell added.
Stocks also got a boost from optimism about a coronavirus vaccine from Nasdaq-traded biotechnology company Moderna. While Asia’s Nikkei 225 was flat in early trading, up less than 1%, the FTSE Eurotop index of largest companies was up an ebullient 4%. The S&P 500 in the U.S. climbed 3%, bouncing back from the past week’s poor performance, its worst since late March.
Unlike in March, when bitcoin performance appeared to be correlated with stocks, a very strong day for equities doesn’t seem to be helping the digital asset, and getting past that $10,000 psychological barrier might be tough.
Constain Kogan, a partner at crypto fund BitBull Capital said that “$9,800 seems the top for the moment. So we might see a bottom of this consolidating trend, which is around $9,250-$9,300.”
Kugelberg invoked the scarcity thesis, the concept of a limit to the amount of bitcoin produced, as a reason to remain bullish.
“A $10,000 level is not at all a goal to me, not even $15,000,” he said. “There’s no asset like this, imagine we found out no more gold mines can be found and that we have mined all the gold there is?”
Cryptocurrency winners include cardano (ADA) gaining 5.3%, bitcoin sv (BSV) in the green 4.3% and tron (TRX) up 2%. Losers in 24-hour trading include decred (DCR) slipping 1.5% and stellar (XLM) down 1%. All price changes were as of 20:30 UTC (4:30 p.m. ET) Monday.
In commodities, gold suffered a sell off Monday, as the yellow metal slipped less than a percent to $1,731 at the close of New York Trading.
Oil is making some big gains Monday, up by 9%. “The pandemic resumption plan by the US and Europe has led investors to anticipate that global crude oil demand will increase in the second quarter, boosting crude oil prices,” said Nemo Qin, senior analyst for multi-asset brokerage eToro.
U.S. Treasury bonds all climbed Monday. Yields, which move in the opposite direction as price, were up most on the two-year bond, in the green 17%.
Author: Alyssa Hertig