Decentralized finance is going through its first great moment, with a market that has been growing exponentially in a few days. One of the DeFi projects that has attracted the most capitalization is Wrapped Bitcoin (WBTC), a simple but quite interesting protocol for those who want to expand the usefulness of Bitcoin.
WBTC growth influenced by the DeFi boom
With a year and a half of life, Wrapped Bitcoin has managed to block 58,787 BTC, but it was not until June of this year that the true growth began.
On June 20, 2020, WBTC had a capitalization of just $ 12.7 million, and today that figure is $ 635 million.
There is no doubt that more than fundamentals, this explosive growth has been induced by the boom in decentralized finance, and this does not mean that it is an undeserved success.
This protocol based on the Ethereum network uses an ERC-20 token that sets its price with a smart contract anchored to the price of Bitcoin. Each WBTC token is backed by one Bitcoin.
With this, it is possible to take advantage of the flexibility of the ETH network, to promote new use cases for Bitcoin, especially in the growing ecosystem of decentralized finance.
It is truly amazing how much Bitcoin has been tokenized in recent months. The growth is totally parabolic and there are still no signs that it will stop.
The interest of large institutions in acquiring Bitcoin in the form of tokens is showing. Such is the case of Alameda, who already own more than 70% of the total WBTC.
Bitcoin technical analysis
Knowing that the WBTC is anchored to the price of Bitcoin, and its growth driven by the interest that the cryptocurrency itself attracts, we can analyze the BTC graph to read the current behavior and forecast its future.
From the weekly candlestick chart, we observe how the Bitcoin trend in the medium term has remained solidly bullish, building increasingly higher lows and highs, followed by the moving averages 8 EMA and 18 week SMA that currently work as supports. dynamic.
The drop we saw in recent days may not be more than a reversal of this trend, before looking for a new annual high. At the moment the odds are in favor of this scenario.
Short term trend
In the short term the trend is turning to the upside, the product of 2 continuous resistance breaks.
The 8-day EMA and 18-day SMA moving averages crossed higher yesterday following that behavior.
There is still the resistance zone at $ 11,200 to be noted, which constitutes the neck of a neat Shoulder Head Shoulder formation.
Rejecting that level would be a negative signal for BTC, and consequently for the Wrapped Bitcoin token.
However, it is still necessary to observe the reaction to confirm that this will happen in this way, since taking into account that the medium and long-term trend is totally upward, it is quite likely that the bulls will surprise us with a significant volume of purchase , and end up dragging Bitcoin towards a new yearly high.
What do you think of WBTC and its growth? Interesting isn’t it? Let us know your opinion in the comments!
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