Bitcoin has experienced an increase of over 5% since Wednesday, but the preceding weeks have been marked by volatility and uncertainty. However, a major announcement from Coinbase is instilling new optimism among BTC holders looking to seize DeFi opportunities.
As of yesterday, Coinbase unveiled Coinbase Wrapped BTC (cbBTC), an ERC20 token that is fully backed by Bitcoin (BTC) held in Coinbase’s reserves at a 1:1 ratio. cbBTC will initially be available on Base and Ethereum, with plans for further chain expansion in the future.
This initiative enables Bitcoin holders to unlock innovative methods of participating in decentralized finance (DeFi), providing enhanced flexibility for utilizing their BTC across various platforms.
The launch of cbBTC by Coinbase represents another advancement in fostering economic freedom within the crypto sector. BTC users now have increased chances to leverage their assets while integrating into the expanding DeFi ecosystem.
Bitcoin Is Now Accessible On Base
Coinbase is making a pioneering move by connecting significant off-chain Bitcoin liquidity to rapid, low-cost financial networks on Base and Ethereum.
With cbBTC, Coinbase enables Bitcoin holders to utilize their assets across a wider range of chains, promoting a more interconnected financial system. Wrapped assets like cbBTC provide users with new opportunities to utilize Bitcoin, bridging the divide between traditional Bitcoin holdings and decentralized finance (DeFi).
cbBTC simplifies the transition of assets between chains by offering seamless interoperability with DeFi applications. This innovation introduces new potential applications, such as using Bitcoin as liquidity for DeFi protocols or as collateral for acquiring additional crypto assets.
Initially, cbBTC will be available on decentralized exchanges (DEXs) like Aerodrome, Curve, Matcha, and Uniswap, as well as lending platforms such as Aave, Compound, Morpho, Moonwell, and Spark. Furthermore, cbBTC can be utilized within real-world asset (RWA) protocols such as Maple.
When users of Coinbase transfer Bitcoin from their accounts to an address on Base or Ethereum, their BTC will automatically convert into cbBTC at a 1:1 ratio. Conversely, when users receive cbBTC in their Coinbase accounts, it will convert back to BTC.
Notably, cbBTC will not have a distinct trading pair or order book on Coinbase but can be traded through DEXs using Coinbase Wallet and potentially other third-party exchanges that choose to support it.
Bitcoin Price Approaching Critical Resistance
Currently, Bitcoin (BTC) is trading at $58,302, making strides towards higher prices. However, for a sustained rally, it needs to surpass the 4-hour 200 exponential moving average (EMA) at $58,717—less than 1% from its present value.
This EMA has served as a crucial point of short-term resistance since early August, underscoring its significance. A successful breakout and sustained hold above this EMA could indicate a trend reversal, potentially pushing BTC to test the next major resistance level around $61,500. This threshold will be critical to monitor.
On the other hand, if Bitcoin fails to close above $60,000 in the forthcoming days, a period of consolidation or even a deeper correction could emerge. This situation would imply that current resistance remains intact, and BTC might encounter additional hurdles in its endeavor to climb higher. Traders and investors should keep a close eye on BTC’s capacity to overcome this resistance for insights into its near-term direction.
Featured image from Dall-E, chart from TradingView
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