Not a day goes by without someone doing something related to decentralized finance (DeFi). It is billed as being bigger than the altcoin boom of 2017, and when you look at things like the monstrous market capitalization of Tether, the recent surge in the price of Chainlink as well as the DeFi Celsius platform recently exceeding $ 1 billion dollars of crypto deposits, it is clear that these are well-founded claims.
However, the only problem that this potentially poses for Bitcoin is the value proposition for individuals and wealthy institutions planning to enter space.
Earn up to 8% interest on the USDT in one year or risk losing 11% on Bitcoin in one day?
Daily performance of the crypto market. Source: Coin360.com
Bitcoin trades at the top
1 day BTC / USD chart. Source: TradingView
Using the BTC 1 day chart, it is clear that we are still in a descending pattern dangerously close to a channel high. The current price is around $ 9,150 and the resistance is $ 9,270.
This puts mid-level support at $ 8,750 and channel support below $ 8,200, suggesting to potential Bitcoin buyers that an 11% drop in channel support is a potential scenario.
I don’t know about you, but faced with a potential loss of 11% in one day, versus 8% in one year on a DeFi platform, the risk versus the reward, especially for institutions managing third-party portfolios, this the latter certainly sounds like the safest bet.
But what about the same perspective on the world’s second largest coin in terms of market capitalization, namely Ether? Its Ethereum blockchain hosts many of these so-called DeFi projects that have attracted a lot of attention in recent times.
The rise of the phoenix
1 day ETH / USD chart. Source: TradingView
Comparatively, Ether (ETH) appears to be trading at the low of its current ascending channel on the daily chart. In other words, this gives an image of a 50% increase and a 3% decrease.
While this is only a view, and by no means a guarantee of what will happen in the immediate future, it signals to me that the Etheruem Ether token could potentially organize its return.
Despite all the FUD and controversy, you can also read on Twitter about the delays of Ethereum 2.0 and one of its co-founders wanting to be disassociated from it. However, you cannot deny that Ethereum has cemented itself as being as important as Bitcoin in the cryptocurrency space.
Without Ethereum, you wouldn’t have the majority of DeFi platforms, smart contracts, or altcoins that could give you insane returns if you pick the right one, including the beloved Chainlink (LINK) of the Marines.
The Fibonacci Weekly for Ether
ETH / USD 1 week chart Source: TradingView
In last week’s technical analysis, I watched the lie on Bitcoin. Little has changed in the price of Bitcoin since it still hovers around 0.382 fib.
However, for Ether, all price action in its current channel occurs below 0.236, which would place ETH / USD near $ 400 if it hits the first Fibonacci level.
Moreover, it doesn’t even bring the price of Ether closer to Bitcoin’s current retracement levels. If ETH were to approach the fib of 0.382, we envision a 150% gain on the second largest cryptocurrency in space.
The question then is whether Ethereum will start to outperform Bitcoin in the immediate future?
If so, what will happen to all of the ETH-related alts and subsequent benefits that people start taking only on ETH pairs? What effect would you expect across space? It seems to be 2017 again while presenting a third attractive option for investors.
- DeFi Interest Growth
- Potential loss of 11% when buying Bitcoin
- 150% gain on the global computer that is Etheruem?
Bitcoin has long been touted as a safe haven asset and a storage asset. But DeFi presents alternative investment opportunities, and while perhaps a token like Chainlink could lead the next bull run, remember that paired assets are the ships that will increase with the tide, which places Ether in privileged position for a return.
The bullish scenario for Bitcoin
BTC / USD 1 hour chart. Source: TradingView
Looking at Bitcoin on the hourly chart, it is important that Bitcoin bulls break through the 0.618 threshold of $ 9,300 to exit the current decline. The price has been rejected over the $ 0.382 of $ 9,200 in the past 24 hours, so for now all eyes are firmly on that narrow range.
Once out of that range, breaking out of the current fib pattern of $ 9,500 would be the key to seeing the multi-year resistance of $ 10,500 be put to the test again.
The bearish scenario for Bitcoin
I see a lot of support around $ 8,900 on the daily chart. From there, it starts to open $ 7,800 as the next potential Fibonacci target for support.
1 day BTC / USD chart. Source: TradingView
Support can be found along the way in the channel between $ 8,750 and $ 8,350 before considering these downside targets.
1 day BTC / USD chart. Source: Tensorcharts
However, if $ 8,200 is lost, I expect the levels of $ 7,000 to drop very quickly as there are no large purchase orders on the Binance order book heat map below $ 8,500.
The views and opinions expressed here are solely those of @officiallykeith and do not necessarily reflect the views of Cointelegraph. Each investment and trading movement involves risks. You need to do your own research when making a decision.