Market Wrap: DeFi Is Helping Ether Outpace Bitcoin This Year

Bitcoin and ether are soundly beating nearly all major global equities indices on the year. Of the two, ether is handily beating bitcoin’s price performance when the market is moving higher. 

The second-largest cryptocurrency by market capitalization, ether (ETH) is trading around $243 and climbed less than a percent in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

At 00:00 UTC on Tuesday (8:00 p.m. ET Monday), ether was hit with high selling volume on exchanges like Coinbase. Its price swung between $239 and $249 within an hour. Since then, ether has been changing hands at around $243, slightly above its 50-day and 10-day moving averages, a bullish technical indicator were it to last.

TradingView
Ether trading on Coinbase since June 7
Source: TradingView

Since January, ether’s price performance has been steadily outpacing that of bitcoin (BTC). With over 90% in gains since 2020 started, ether holders are beating bitcoin investors because the world’s largest cryptocurrency by market capitalization is up by just over 30% since January.

btcvsethjune9
Ether versus bitcoin in 2020
Source: TradingView

One of the reasons for ether’s boost is the increasing use of decentralized finance, or DeFi, said Peter Chan, a trader for Hong Kong-based crypto firm OneBit Quant. DeFi is used for lending and trading, including derivatives, using the Ethereum network’s smart contract technology instead of third parties providing centralized software.

“This explains why we see bigger pumps on ether than bitcoin when the market moves upwards,” Chan added. “Ethereum is evolving much faster than bitcoin with the rapid growth in DeFi.”

See also: ‘Inherently Borderless’: Acting OCC Chief Talks Crypto, State Licenses and DeFi

Indeed, while dipping considerably during March’s market crash, the amount of U.S. dollar value locked in DeFi has recently surpassed $1 billion once again.

lockedindefijune9
Cryptocurrency locked into decentralized finance, in dollar terms
Source: DeFi Pulse

While the amount of price…

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