Bitfinex Outstrips DeFi Market in Ethereum Holdings. Taking data from crypto analytics platform Glassnode, Elias Simos of blockchain venture fund …
Crypto exchange Bitfinex now holds more Ethereum (ETH) than the total value locked (TVL) in USD of ETH in the decentralized finance (DeFi) market. The platform is also increasing its exposure to Tether (USDT) with its balance of the stablecoin continuing to rise since mid-March 2020.
Meanwhile, the Bitcoin (BTC) balance on Bitfinex has taken a sharp downturn over the same period, dropping by more than 50%. The preference for USDT over BTC might point towards the expectation of an imminent price drop for Bitcoin hence exchanges like Bitfinex choosing to limit their exposure to the top-ranked cryptocurrency by market capitalization.
For Simos, three explanations exist for Bitfinex’s increased appetite for the second-ranked crypto by market capitalization. The first likely reason has to do with the crypto exchange looking to profit from staking in ETH 2.0.
Some crypto pundits have predicted that the staking upgrade coming in ETH 2.0 will act as a catalyst for a massive Ethereum price bull run. Thus far, the launch of ETH 2.0 has been beset with delays with project co-founder Vitalik Buterin earlier this week revealing work on the update was still on track.
Simos also opined that Bitfinex could be doubling up on ETH to cover gas costs associated with USDT transactions on Ethereum while also enjoying greater funding rates on the crypto itself than DeFi. Tether transaction volume on Ethereum has increased significantly and was even the cause of network stagnation back in late 2019.
Bitfinex holding more USDT comes as Tether has been on a massive printing spree, minting millions of its stablecoin almost on a daily basis. Back in April, Blockonomi reported that Tether’s market capitalization had crossed the $7 billion mark. As of press time, Tether’s valuation has grown by over $1.5 billion in double-quick time and is now on the cusp of dethroning XRP from the third position on the crypto market cap log.