DeFi Frenzy Boosts Cryptocurrencies' Performance Above Gold

DeFi Frenzy Boosts Cryptocurrencies' Performance Above Gold

According to the Bloomberg Galaxy Crypto Index, the DeFi frenzy has made cryptocurrencies the top-performing asset this year, surpassing gold prices. The index has surged by approximately 66% this year, while gold has only increased by just over 20%.

The expansion of Ethereum, which accounts for more than a third of the Galaxy Crypto Index's weight, is primarily responsible for the cryptocurrency surge. The adoption of blockchain technology has increased thanks to DeFi, which makes it feasible for individuals to lend, borrow, and engage in other activities without conventional intermediaries such as banks.

According to Fasset, a blockchain infrastructure investment market, DeFi security has increased from less than $700 million to $9 billion. However, some experts are skeptical that cryptocurrencies are inherently unstable, and the DeFi trend may not be as decentralized as it claims to be.

Bloomberg Cryptocurrency Index Falls Over 8%

The Bloomberg Galaxy Cryptocurrency Index fell more than 8% in the three trading days before Tuesday, highlighting its high volatility. The index has retraced more than 20% since its peak in August.

Overall, as the bitcoin and ethereum derivative markets expand, interest in cryptocurrencies is increasing among investors.

Aziz Zainuddin, Product Director of Fasset, stated that decentralized finance is driving increased interest in Ethereum contracts, with retail investors gradually turning towards the derivative market for maximum returns.

As the cryptocurrency market continues to evolve, it remains important for investors to stay informed and exercise caution when making investment decisions.