DeFi, universally known as Decentralized Finance, has gained massive attention in the world of traditional assets like government bonds, stocks, ETFs, etc. DeFi and Fintech are gradual evolutions in the world of cryptocurrencies—digital money.
This digital money and investment sector boomed late in 2017 when the world witnessed the investors’ major price rally and superficial profits, which otherwise took decades or people to earn. It was then when Bitcoin, Ethereum, and XRP—the three significant cryptos of the market were seen hitting exponential heights, and BTC till now lacks an equal amount of potential to regain the same momentum and trade above $20,000.
However, the current momentum and the crypto market need a new injection of money from the institutional investors, which is currently lacking. DeFi, along with crypto as an investment option, scouts the new ways of investing money, not different assets according to an individual’s risk-reward investment ratio, but in cryptocurrency. Therefore, just as cryptocurrency gains momentum in the field of investments, DeFi takes over as an innovation in the way of DeFi assets.
While comparing traditional assets to that of DeFi assets, the latter includes cryptocurrencies viz., Bitcoin & Ethereum. However, the DeFi platform now includes many tokens apart from the 1st and 2nd generation cryptos. DeFi definitely deserves a place in the portfolio, and the hype is all the worth.
To compare practically, we have the stock indexes that bond market against DeFi or, in general, Bitcoin and Ethereum; we saw the major in almost all the markets, including the crypto market. But the later held complete support while the former kept plummeting without steady support. Undoubtedly, the former gained the lost momentum, but we cannot ignore the intermittent crashes thereafter.
Moreover, if we compare the numbers in terms of YTD growth of these indexes, S&P 500 has recorded a growth (approximately in %) of 3.36%, NASDAQ 100—28.59%, S&P—6.83%, Bitcoin—42.90%, Ethereum—181.74%. The numbers clearly show an amplified growth of the top cryptocurrencies of the global market.
Moreover, Bitcoin is often compared to Gold, and the latter is a better value of investment amongst the traditional investment assets. DeFi will be a future of these digital investments in the near-term as the world faces problems—the most recent one being, Coronavirus Pandemic.
Bitcoin regained the lost momentum and is regaining the height is lost, and it rose as high as $10.9k yesterday, while currently trades at $10.8k. However, just when the altcoins like Chainlink, DigiByte, Verge, etc. were seen gaining the lost momentum, these coins are currently droppingly notably in the most lucrative DeFi platform—Chainlink, dropped by over 9% in the intraday.
Alongside the major altcoins among the top 30 of the global crypto market like Tron, Ethereum, Litecoin, OKB saw a dip of approximately 40%, 3.03%, 2.74%, and 0.94%, respectively since the start of the month till date. Meanwhile, BTC dominance now accounts for more than half i.e., 57% in the global crypto market. The Bitcoin price gain has been a significant driver in the very short-term, but the DeFi altcoins dump has been a concern.
Despite the current dump, we cannot ignore the power of DeFi, and the growth prospects it holds over the period of time concerned to the near future. Presently, DeFi has not been an exciting field for potential investors today, but in the upcoming months, when the traditional markets face resistance in times like the ongoing Pandemic, the Fintech and DeFi will take no time to escalate and make its breakthrough.