Ethereum Blockchain Now Houses Bitcoin Worth $4.9 Billion
The current surge of the price of BTC and the mass rally it has enjoyed in the past few weeks is currently not slowing down. The leading cryptocurrency now has an all-time high of about 136,000 BTC locked in Ethereum, which constitute about 4% of Ethereum’s market cap. This figure is at its peak at the moment due to the record breaking price of BTC, although many BTC holders have fled somewhere else with their investments.
Analysts predict this trend to see an upward spiral if BTC prices move up, regardless of further withdrawals. The new development has been propagated by cross-chain services on DeFi that allow investors with BTC to trade with it on the Ethreum blockchain. The basic disadvantage of these services rendered by these vendors on the Ethereum network is that BTC holders will not be eligible to trade on the network without them. Alternatively, a few Cross-chain transfers like Wrapped Bitcoin or renBTC allow BTC holders to trade and buy Ethereum-based digital assets on the Ethereum network without selling their BTC.
Investors might be taking advantage of BTC prices
In a report last November, the value of BTC in the Ethereum space was at an all-time high of about $2.5 billion, with BTC trading slightly below $17,000. However, it is worthy to note that a steady decline of about 10% of BTC in the Ethereum space has been unable to negatively affect the system’s overall value because BTC is currently trading at almost double that price today.
However, analysts are suggesting that the withdrawal of the BTC in Ethereum by investors might have been disregarded by the need to get value for investment and take full advantage of the rising prices of BTC. The trend will likely not stop, especially if BTC continues to rise in prices.
The effect on DeFi space
In recent research carried out by analysts, the cross-chain platform has been able to use these services to attract billions of dollars into the DeFi space. DeFi constitutes a collection of on-chain protocols that rely on smart contracts to provide related financial services like loans, asset swaps, or interest on user deposits. If the value of BTC continues to rise on the Ethereum blockchain, it will imply that Defi will cater to providing better rates and expanding its capacity for users.
However, the most beneficial thing for the DeFi space will either be that the many BTC leave the space and prices of BTC keeps going high or that a lot of BTC are retained in the system amidst fluctuating prices. However, what can not be overstated is that more value of BTC in the system implies better days for DeFi.