Bitcoin’s dominance grows amid halving as crypto offerings expand and DeFi is given huge boost
DATA from CryptoCompare shows that Bitcoin's price started moving up again throughout the past week, despite touching on the $60,000 mark more than once, the cryptocurrency recovered to now trade at $66,000.
Ethereum’s Ether, the second-largest cryptocurrency by market capitalisation, moved in a similar way. Over the past week, ETH’s price dropped from around $3,000 to a low under the $2,900 mark, but quickly recovered to trade at $3,215.
Headlines in the cryptocurrency space over the week noted that Bitcoin’s dominance soared to a three-year high, with the flagship cryptocurrency accounting for around 55% of the $2.4 trillion cryptocurrency market right before its halving event.
Bitcoin’s growing dominance came as a result of the launch of spot Bitcoin exchange-traded funds in the United States from major asset managers including BlackRock and Fidelity and ahead of its halving event, which occurred at block height 840,000 over the weekend.
The halving meant that the Coinbase reward miners receive per block found was cut in half, with the reward dropping from 6.25 BTC to 3.125 BTC as a result of the event.
Notably the halving occurred at a time in which the supply of Bitcoin on centralised cryptocurrency exchanges has been falling steadily and could be depleted in as little as nine months, according to a report by cryptocurrency exchange Bybit.
The report details that demand for Bitcoin from spot Bitcoin ETFs, coupled with the supply reduction from the halving, could mean that the less than two million BTC left on exchanges could run out by November, assuming a daily inflow of $500 million from the ETFs.
Demand for Bitcoin could keep on growing even beyond that, however, as over the past week Hong Kong approved applications for its first spot BTC and ETH exchange-traded funds, after officially launching a licensing regime for cryptocurrency trading platforms last year.
According to CCData, spot trading volumes surged on Hong Kong-based centralized exchanges in anticipation of the ETF launches.
Notably, mainland Chinese investors are likely to be barred from Hong Kong’s spot Bitcoin and Ether ETFs, as according to Bloomberg ETF analyst Rebecca Sin, mainland Chinese investors face significant barriers to access the funds.
German banking giant LBBW to offer crypto custody services
Germany’s largest state-backed lender - Landesbank Baden-Württemberg (LBBW) - has unveiled a partnership over the week with Bitpanda, an Austrian cryptocurrency exchange, to offer cryptocurrency custody services.
This joint venture will utilise an “investment-as-a-service” framework, enabling LBBW to offer its corporate clientele a way to “store and procure cryptocurrencies”, including BTC and ETH.
The week also saw popular cryptocurrency exchange OKX launch an Ethereum scaling solution for its users, the Layer-2 network X Layer, offering lower fees and interoperability when interacting with decentralized applications.
X Layer leverages zero-knowledge proofs for security and scalability, while also being compatible with the Ethereum Virtual Machine (EVM), which allows developers to seamlessly migrate Ethereum-based decentralized applications onto it.
Meanwhile, cryptocurrency exchange Kraken launched an open-source mobile cryptocurrency wallet offering users a way to manage their digital assets based on privacy and open-source principles.
The exchange notably also moved to expand its presence in the United States last week after it completed the acquisition of TradeStation Crypto, the cryptocurrency-focused division of the online brokerage TradeStation.
Florida-based TradeStation Crypto secured money transmitter licenses and other regulations in many U.S. states, but the firm faced a hurdle with the US Securities and Exchange Commission (SEC) over a crypto lending program that resulted in a $3 million settlement. After the settlement, TradeStation’s parent company announced it was pulling out of the cryptocurrency market.
DeFi growth explodes in Q1 2024
The first quarter of 2024 witnessed a remarkable resurgence in the decentralized finance (DeFi) sector, with data revealing a surge in Total Value Locked (TVL) on DeFi platforms, climbing from a low of $36 billion in the final quarter of 2023 to a peak of nearly $97 billion in the first three months of this year.
This upward trajectory continued, with TVL reaching a two-year high of $98 billion last week, reflecting an impressive 81% increase since the year began, with a joint report from QuickNode and Artems noting that “staking, liquid staking, restaking, and liquid restaking” were key drivers behind the sector’s expansion.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
