Lured by the sirens’ call, traders are wrapping their Bitcoin at record levels in order to yield farm and trade DeFi tokens.
After failing to hold the $11K mark and exposing what some analysts have described as a general apathy to trade BTC at these levels, Bitcoin (BTC) price is once again flirting with $11,000.
As suggested by Cointelegraph contributors Marcel Pechman and Micheal van de Poppe, a move above $11K is not a deeply significant milestone as the confluence of multiple factors, including looming overhead resistance and low trading volume decrease the likelihood that the digital asset will breakout once above $11K.
Cryptocurrency daily market performance snapshot. Source: Coin360
The supposed lack of interest from traders can possibly be attributed to other big developments taking place in crypto. As Cointelegraph reported, decentralized exchange, UniSwap, airdropped 400 UNI tokens to every user who had provided liquidity before the start of September.
Many crypto advocates and pundits have pointed out that UniSwap’s helicopter money is bigger than the $1,200 economic stimulus check the U.S. government distributed to citizens at the behest of the Trump Administration.
Let’s also add that it didn’t take months for UniSwap users to receive their UNI, whereas today there are Americans who are yet to receive their stimulus check.
Bitcoin tokenized to Ethereum tops $1 billion
Another milestone worth noting is the value of Bitcoin tokenized on Ethereum crossed above $1 billion this week. This highlights the overwhelming interest and demand from Bitcoin holders desiring to interact with DeFi protocols.
BTC locked in DeFi. Source: DeFi Pulse
Given that Bitcoin price has spent the last 2 months struggling to knock out the $12,000-$12,500 resistance level, clever traders who are long on BTC have wrapped their coins to either become liquidity providers in incredibly lucrative liquidity pools or investors in successful DeFi tokens like YFI, YFL, LEND, REN to name just a few.
BTC locked in WBTC. Source: DeFi Pulse
Data from Btconethereum.com shows that in total 96,059 BTC have been wrapped on Ethereum blockchain. Of this total figure, 64,466 BTC are in WBTC, 21,952 in renBTC, and 4,810 in HBTC.
Aside from a record number of BTC being wrapped to ERC-20 tokens, Tether’s (USDT) market cap has now risen above $15 billion and those familiar with yield farming will know that utilizing stablecoins to provide funding to liquidity pools is quite lucrative.
While the data mentioned above is not substantive enough to conclude that Bitcoin traders are getting their dinner from another table, there are other opportunities out there and with Bitcoin sideways and struggling to find momentum, the data suggest some traders are capitalizing on them.
What’s next for Bitcoin price?
In the short-term the 4-hour chart shows Bitcoin price back above the 20-MA making higher lows and lower highs which is a positive. On the 4-hour and daily time frame the volume profile visible range (VPVR) shows resistance at $11,280 and $11,600.
BTC/USDT 4-hr chart. Source: TradingView
Below this the most immediate hurdle is at $11,150 and another rejection at this level could see the price retract to support at $10,500 and $10,350.
As always, volume precedes price, and the current lack of buy volume does little to inspire confidence from traders. Sharp-eyed traders will also have noticed the bearish divergences on the daily moving average convergence divergence and the relative strength index.
Until bulls turn up to provide some buying pressure, Bitcoin price remains at risk of a correction to $9,700, or even a tad bit lower at $9,183 where the 200-MA currently resides.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
