Ethereum [ETH] based DeFi, MakerDAO, adds support for Bitcoin [BTC] as a collateral to issue the DAI stablecoin. WBTC (Wrapped Bitcoin), issued on Ethereum, will now be used in addition to ETH, BAT, and USDC to open Maker Vaults in order to generate Dai. Maker developers noted in the update yesterday,
Bitcoin holders can now turn their BTC into WBTC (bringing Bitcoin to the Ethereum blockchain), and then use it to generate Dai.
MakerDao is one of the leading DeFi solutions built on Ethereum. Widening the collateral pool to include a variety of cryptocurrencies essentially generates FIAT using the value of cryptocurrencies. Nic Carter, leading on-chain analyst and founder of Coinmetrics, noted,
I think “pure” crypto-backed stablecoins are very powerful & highly value accretive to the underlying native units (i.e. btc & ether). There’s merit in staying pure. Even though it’s more expensive to create $s (dollar) out of pure crypto collateral.
Nevertheless, there remains considerable risk w.r.t. to the volatility and growth of this collateral. Moreover, the addition of Bitcoin to the DeFi pool presents a value risk for the use of Ethereum. Currently, the dominance of Bitcoin and Ethereum over the crypto-market is 66% and 9%, respectively.
Moreover, the strong correlation in the price of cryptocurrencies with Bitcoin, usually determines the trend for the altcoins as well. Crypto trader, Brandon Lawless (alias), observed a strong bull and bear trends based Bitcoin above (red) or below (blue) the 20-week average. The 20-period weekly moving average is currently at $7965.
On a daily scale, the trend post the coronavirus crash has been bullish. However, it has formed an ascending wedge which is a bearish pattern. The price is currently approaching a break-out below support at $200.
Nevertheless, the 50-period EMA (Exponential Moving Average) is looking form a ‘golden cross’ with the 200- Day EMA, which is bullish if confirmed.
The price of Ether [ETH] at 5: 15 hours UTC on 4th April 2020 is $196. The price action and daily closing today will be of considerable importance in establishing short-term trend in Ether [ETH].
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