Cryptocurrencies outperformed gold and other investment vehicles to become the best performing assets this year, according to data released by Bloomberg. Besides Bitcoin, the decentralized finance (DeFi) world played a significant role in this success.
According to the Galaxy Crypto Index, cryptocurrencies increased by 65% in 2020. According to Bloomberg data, cryptocurrencies surpassed the 20% rising gold chart with this extraordinary performance. Cryptocurrencies outperformed stocks, bonds and commodities as well as gold.
This leap is attributed to the fact that individual and institutional investors prefer to invest in Bitcoin against inflation and weakening dollars due to the coronavirus effect. Both retail and larger investors saw Bitcoin as a safe haven, just like gold.
In this performance in 2020, besides the leading coin BTC, the Ethereum effect also manifests itself. The DeFi world, which uses the Ethereum base and has grown like an avalanche in recent months, has brought new investors closer to cryptocurrencies as well as the current sector investors. More and more individual investors flocked to the industry to multiply their money with models such as yield farming offered by various DeFi platforms. While the value locked in the decentralized finance sector was approximately 700 million dollars at the beginning of the year, according to DeFi Pulse, the same value reached 9.5 billion dollars at the end of 9 months. Bloomberg Intelligence analyst Mike McGlone explained the rise in Ethereum price with developments in the DeFi industry.
Some Market Experts Still Don’t Trust Cryptocurrency
But some names are still not convinced of the reliability of cryptocurrencies. The fact that most of the cryptocurrencies have high volatility due to their nature still makes some investors think. For example, the Bloomberg Galaxy Crypto Index has lost 6.4% in just 3 days and more than 20% since August.
In addition, the reliability of new platforms in the DeFi industry is shaken by the defeat of users due to inadequate testing processes or technical errors.