Not a day goes by without someone shilling something related to Decentralized Finance (DeFi). It’s being touted as being bigger than the 2017 altcoin boom, and when you look at things like the monstrous Tether market cap, the recent surge in the price of Chainlink as well as DeFi platform Celsius recently exceeding $1 billion in crypto deposits, it's clear that these are well-founded claims.
However, the one problem that this potentially presents for Bitcoin is the value proposition to high-net-worth-individuals and institutions considering entering the space.
Earn as much as 8% interest on USDT in a year or risk losing 11% on Bitcoin in a day?
Daily crypto market performance. Source: Coin360.comBitcoin is trading at the top
BTC/USD 1-day chart. Source: TradingView
Using the 1-day BTC chart, it’s clear that we’re still in a descending pattern dangerously close to the top of a channel. The current price is about $9,150 and the resistance is at $9,270.
This puts the mid-level support at $8,750 and the lower channel support at $8,200, which suggests to potential Bitcoin buyers that an 11% drop to the channel support is a potential scenario.
I don’t know about you, but when faced with potentially losing 11% in a day, compared to earning 8% in a year on a DeFi platform, the risk vs. reward, especially for institutions managing third-party portfolios, the latter certainly looks like the safest bet.
But what about the same view on the world's number-two coin by market capitalization, namely Ether? Its Ethereum blockchain hosts many of these so-called DeFi projects that have been gaining a lot of attention lately.The rise of the phoenix
ETH/USD 1-Day chart. Source: TradingView
Comparatively, Ether (ETH) looks like it is trading at the bottom of its current ascending channel on the daily chart. In other words, it paints a picture of a 50% upside and a 3% downside.