The Impact of Bitcoin's Surge on DeFi and Memecoins

The DeFi world just hit a big milestone, with its total value locked (TVL) breaking the $100 billion barrier on March 9.

by Faruk Imamovic
The Impact of Bitcoin's Surge on DeFi and Memecoins
© Getty Images

The DeFi world just hit a big milestone, with its total value locked (TVL) breaking the $100 billion barrier on March 9. This is a huge deal for DeFi, showing that it's bouncing back and that more and more investors are getting on board.

But even with this big win, it's worth mentioning that we're still not at the all-time high of $189 billion from back in November 2021. A big part of this comeback story for DeFi has to do with how popular Bitcoin has become, along with a general buzz of excitement around cryptocurrencies.

When spot Bitcoin ETFs started up in January, it really kicked things into high gear, pulling in both big-time investors and regular folks to dive into DeFi.

Leading Protocols and the Bitcoin Effect

Lido is at the top of the DeFi game right now, with a whopping $38.7 billion tied up in its system.

Hot on its heels are EigenLayer and Aave, each with over $11 billion locked in. These guys are leading the charge in DeFi, offering cool financial services without the old-school middlemen getting in the way. But the real star of the show is Bitcoin, which has been absolutely smashing it lately.

Its price shot over $70,000 on March 8, all thanks to a lot of interest from big investors in spot Bitcoin ETFs. This surge isn't just good news for Bitcoin; it's also pouring money into DeFi, helping the whole crypto world grow and thrive.

Bitcoin's Ripple Effect on Memecoins

Bitcoin's price jump has really lit a fire under memecoin prices too. Bitget Research shows some wild rises in this quirky part of the market. Coins like Korra, Ribbit, and PUG AI have seen their prices shoot up like rockets this past week.

Even well-known ones like Shiba Inu and Pepe are raking in some serious gains, showing just how much Bitcoin's big move is shaking up all kinds of cryptocurrencies. This ripple effect from Bitcoin is a big deal. As more people and news outlets keep their eyes on Bitcoin, it's also shining a spotlight on other coins, from DeFi tokens to those playful memecoins.

This is making the crypto world even richer with options for folks looking to invest.

Bitcoin© Getty Images

Decoding Bitcoin ETFs: Myths and Realities

The introduction of Bitcoin ETFs is a big deal, changing how people can get into the cryptocurrency game.

But, like anything new and flashy, there's a bunch of myths and misunderstandings floating around about Bitcoin ETFs. It's super important for everyone, from crypto pros to folks just starting out, to get the real scoop on what makes investing directly in Bitcoin different from putting your money into ETFs.

The Essence of Bitcoin ETFs

A lot of people think that putting money into a Bitcoin ETF is the same as having Bitcoin in your wallet. That's not really how it works. With a Bitcoin ETF, what you're actually doing is buying a piece of a fund that follows Bitcoin's price ups and downs.

You're not getting your hands on any actual Bitcoin. This difference is huge because it means you're riding the wave of Bitcoin's price without owning the coin itself. Unlike having Bitcoin directly, where you control everything about it, with an ETF, you're just tagging along with the fund's performance, hoping it does a good job of tracking how Bitcoin does.

Ownership and Profitability Misconceptions

Some folks think that investing in Bitcoin ETFs is a surefire way to make money, just like Bitcoin itself can offer big returns. But that's not the whole story. Investing in Bitcoin or its ETFs is pretty risky because of how wildly Bitcoin's price can swing up and down.

Sure, ETFs let you get in on Bitcoin's action without actually owning any coin, but don't think that means you're safe from the ups and downs of the market. Before you jump into investing in Bitcoin ETFs or buying Bitcoin directly, it's super important to do your homework and really think about how much risk you're okay with taking on.

Volatility and Market Dynamics

Let's tackle the idea that Bitcoin ETFs are just as wild when it comes to price changes as Bitcoin itself. The truth is, while Bitcoin can really take you on a roller coaster ride with its quick and big price changes, Bitcoin ETFs might not be quite as extreme.

That's because they're traded on regular stock exchanges that have set hours and rules, which can smooth out some of the craziness. Plus, ETFs can mix in other investments or strategies to lessen the risk, making their price movements a bit different from just owning Bitcoin directly.

Diving into Bitcoin ETFs opens up a whole world of chances and things to learn. As the crypto scene gets more sophisticated, getting a handle on all the different ways to invest, like ETFs, is super important. Clearing up the myths and focusing on the facts helps investors make smarter choices that fit with their goals and how much risk they're willing to take.

DISCLAIMER: Please note that the content provided here is for informational purposes only and is not intended as financial advice.