The crypto world is going through one of the most interesting moments in its history. Not only thanks to the price of Bitcoin or the increase in the adoption of cryptocurrencies. But also because of the rise of decentralized finance (DeFi) and the entry of millions of dollars to the crypto market. Therefore, today in CriptoTendencia we bring you eight graphs to understand the crypto market.
The Bitcoin market
The first graph to understand what situation the crypto market is in is that of the price of Bitcoin. And it is that, despite the fact that at this time the BTC market is not the priority for crypto users. The price of the cryptocurrency is always a good indicator of where the world of crypto assets is headed.
The price of Bitcoin has tried in recent weeks to overcome the barrier of US $ 12,000 on several occasions, so far without success. At the time of writing the BTC is trading around $ 10,250.
Bitcoin vs fiat money
But, considering that the primary objective of Bitcoin is to become the replacement for fiat money. Perhaps the most interesting graph to analyze the development of its price in the crypto market is to see its relationship with the most important fiat currencies in the world such as the US dollar, the Japanese yen, the Korean won and the euros.
Thus, when looking at the graph that relates the price of BTC with these currencies, we can see a substantial increase in the value of the cryptocurrency against fiat money. Which has remained constant since the month of March.
Yearn.finance and the DeFi boom
However, as we explained, at the moment the price of Bitcoin is not what keeps the crypto community in suspense. Well, although the development of cryptocurrency always attracts great attention, currently crypto users are watching another market: that of decentralized finance.
And it is that, in recent months, the DeFi have experienced an exponential increase in their capitalization. Leading dozens of projects to radically increase their market value in a few weeks. This allowed even a new DeFi product like yearn.finance to perform better in the crypto market than Bitcoin in just days.
Ethereum goes for more
Closely related to the rise of decentralized finance is the increase in the price of Ethereum. Well, the second cryptocurrency in the world has seen its price increase significantly in recent weeks, driven by the situation in the decentralized finance market.
And it is that a good part of the DeFi projects are designed on the Ethereum Blockchain. As transactions related to this sector increase, so does the demand for ETH. Cryptocurrency used for the payment of commissions in DeFi operations. Which in turn drives its price in the market, which at the time of writing this article reaches $ 354. Below the 480 it had a few days ago, but still quite high.
But the commissions …
Although the increase in demand for Ethereum and the transactions executed on its chain could seem like a positive thing. The truth is that this increase in the use of ETH has generated new difficulties for the cryptocurrency, especially due to its scalability problems.
Thus, while the use of Ethereum has increased, so has the size of the commissions that must be paid for transactions, and the execution time of each one. Getting to the extreme where the average commission charged for Ethereum operations in the crypto market is $ 15.21.
An asset store of value?
When the Coronavirus crisis appears to be far from over, the debate over whether Bitcoin is a store of value asset is more important than ever. And it is that, since the pandemic reached the West, the points of view on this matter have been radicalized. With much of the crypto community arguing that BTC cannot be classified as an asset store of value.
Being the main argument to deny the quality of Bitcoin as a haven of value, the correlation that would exist between the cryptocurrency and traditional financial markets, including bonds and stocks. What would lead to when these markets collapse, so does the crypto market, unlike what happens with true value shelters such as gold.
The dominance of Bitcoin
On the other hand, despite the increase in the value of the crypto market thanks to the rise of decentralized finance. The truth is that the world of cryptocurrencies is still essentially dominated by Bitcoin. Cryptocurrency that, as can be seen in the graph, maintains more than 57% of the capitalization of the entire crypto-asset market according to CoinMarketCap.
While a large virtual currency like Ethereum barely reaches 12.90%. Followed by XRP in a distant third place with 3.41%. Which has the consequences not only that most of the investments in the crypto world end up in the BTC market, thanks to the enormous liquidity it offers. If not, the price changes of the currency are crucial to understand the crypto market.
The size of the crypto market
Finally, we close our tour of the crypto market with its capitalization. Well, despite the ups and downs that it has been able to face in recent years, cryptocurrencies have managed to maintain their place as one of the most important financial markets in the world. With a global capitalization of more than 324,000 million dollars today.