Skip to main content

DeFi and DEX volumes soar amid China's crypto ban and ongoing US regulation

Data shows that crypto holders are increasingly shifting to DeFi protocols and DEXs as China continues its cryptocurrency crackdown and fears of heavy-handed regulation scare US-based traders.

Last week China’s heavy-handed crackdown on crypto trading crypto briefly sent shockwaves across the market as Bitcoin and altcoin prices saw a sharp drop following the announcement, but as is the case with all things crypto-related, the market bounced back as resilient traders found other ways to participate in the market. 

Part of China's goal in limiting citizens ability to trade cryptocurrency seems focused on discouraging the use of cryptocurrencies and the growing decentralized finance (DeFi) ecosystem but these maneuvers appear to be having the opposite effect as the token price and protocol activity for projects like Uniswap (UNI) and dYdX have seen an uptick since the crackdown began.

According to data from Chainalysis, there has been a significant amount of regional Bitcoin (BTC) flows happening within eastern Asia, as highlighted by the tall orange bar in the graph below. This suggests that crypto holders in the region have been shifting around their holdings in response to the regulatory crackdown.

Regional BTC flows. Source: Chainalysis

As stated by Chainalysis, “assets typically flow within a region, likely due to preferences for local exchanges, but flows between regions often occur as a result of regulatory concerns, geopolitical changes, or significant market price variations.”

The lack of flows out of Eastern Asia combined with crypto exchanges like Huobi and Binance suspending services for Chinese residents suggests that funds are being kept within the region, but not on centralized exchanges.

Related: Derivatives DEX dYdX beats out Coinbase’s spot markets by volume amid China FUD

Gains in the DeFi Ecosystem

At the same time that this increased movement within the Eastern Asian region was occurring, activity on decentralized exchanges like Uniswap and the decentralized derivatives exchange dYdX has been on the rise as traders in China seek out a safe haven for their crypto activities.

Uniswap trading volume vs. total revenue. Source: Token Terminal

DydX is a particularly helpful data point as it is now the most widely used decentralized derivatives exchange and has seen a spike in demand after regulators from around the world dropped the hammer on centralized exchanges with loose KYC policies that offer derivative services.

According to data from Token Terminal, dYdX is in the top-5 ranking for numerous categories over the past week, including the increase in token price, total protocol revenue, fees paid, the price to sales ratio and the price to earnings ratio. The exchange also rose to the top 6 in terms of increases in total value locked (TVL).

Total revenue vs. total value locked on dYdX. Source: Token Terminal

A closer look at the available data also shows that layer-two protocols and layer-one Ethereum (ETH) competitors have also seen some of the biggest gains over the past week, led by Avalanche-based protocols like Trader Joe and Pangolin, as well as the Fantom network.

Above all else, what the recent data shows is that the decentralized finance ecosystem is performing as it was originally intended to by providing an uncensorable way for crypto holders to transact outside of the control and purview of governments and financial regulators.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.



from https://ift.tt/3D5IilL
https://ift.tt/3F93qcH
Labels:

Comments

Post a Comment

Any questions, Please.

Popular posts from this blog

How to play and earn in CryptoKitties

CryptoKitties is a blockchain-based game where players can buy, sell and breed digital cats with unique attributes. Reminiscent of Tamagotchi and Pokémon, the wildly popular digital pets and creatures of the 1990s, CryptoKitties is a blockchain-based game where players can collect, trade and breed digital virtual cats. CryptoKitties was the first Ethereum-based game, and its popularity underscored many of the network’s scaling issues. This digital cat-breeding blockchain game caused quite a bit of congestion on the Ethereum blockchain, peaking in 2020. However, the game’s creators were able to address these issues. What is CryptoKitties? Launched in 2017, CryptoKitties was built by Dapper Labs, the company that uses blockchain technology to bring nonfungible tokens (NFTs) and new forms of digital engagement to fans around the world. CryptoKitties is also considered one of the world’s first-ever blockchain games. In the game, each one of the digital collectible cats possesses a
Post a Comment
Read more

Bitcoin dominance falls under 40%

While Bitcoin critics claim this means that BTC is losing its first-mover competitive advantage, others are anticipating the “altcoin season” is just around the corner, or might even be already underway. Bitcoin’s market dominance has continued to fall, bottoming out below 40% this week. That’s very close to the all-time low of 36.7% in Jan 2018 according to data from Tradingview. Bitcoin ( BTC ) market dominance refers to the ratio between BTC’s market cap and the total crypto market cap. It's not the first time dominance has dipped in 2021. Back in May, Cointelegraph reported that BTC had dipped to represent just 40.3% of the combined crypto asset capitalization, according to Coinmarketcap, and it neared the same level again in September.  Bitcoin critic and Europac chairman Peter Schiff tweeted about the event on Dec 29th, saying that it’s indicative that BTC is “losing its first-mover competitive advantage.” With over 16,000 alternative cryptos to choose from Bitcoin
Post a Comment
Read more

Five Bitcoin Price Charts Analyzing The Dramatic Q1 2022 Conclusion

There are only hours remaining until the Q1 2022 close in Bitcoin price action. With the important quarterly candle set to close tonight, let’s look at what technicals might say about the direction of the next quarter. Q1 2022 Comes To A Close For Bitcoin The first quarter of a year, often sets the tone for the year to come. In investments, a poor Q1 performance is indicative of a bad year ahead. Considering the fact that Bitcoin price is now above $45,000 after touching $32,000 this quarter, it is tough to say the performance has been “poor” by anything other than crypto standards. Related Reading | Bitcoin Weekly Momentum Flips Bullish For First Time In 2022 The cryptocurrency has recovered nearly 40% from the low, leaving a long wick behind. Such a long wick suggests that before the quarter came to a close, buyers stepped up in a major way. Buyers were able to step up in a larger capacity in Q1 2022 than bears were able to in the final quarter of last year. The bearish wick to cl
Post a Comment
Read more