Galaxy Digital deposited Wrapped Bitcoin and Ethereum worth a total of $170 million into decentralized protocols Aave and Compound as collateral to borrow $71.6 million in USDT stablecoin and $21.9 million in USDC stablecoin.
Galaxy Digital appears to be bullish on Bitcoin and Ethereum as the latest data reveals. The blockchain company recently invested heavily in Bitcoin and Ethereum positions amid the continued price rise. Citing data from DeFi wallet tracker DeBank, Lookonchain showed that Galaxy Digital deposited 4,168 WBTC (worth $142 million) and 16,000 ETH (worth $28.6 million) in Aave and Compound.
Galaxy Predicts 74% Bitcoin Price Rise in First Year After ETF Launch
In an October 24 post on the Galaxy Digital blog, Charles Yu, research associate at Galaxy Digital, estimated that the total addressable market size for Bitcoin ETFs would be $14.4 trillion in the first year after launch. He arrived at the 74% figure by evaluating the potential price impact of fund inflows into Bitcoin ETF products using gold ETFs as a benchmark.
According to Yu’s estimates, the price of Bitcoin would increase by 6.2% in the first month after the launch of an ETF, to then steadily decline to a monthly increase of 3.7% by the 12th month.
Yu predicts that the addressable market size of Bitcoin ETFs in the US will reach $26.5 billion in the second year after launch and $39.6 billion after the third year. He added that “2024 could be a big year for Bitcoin,” citing ETF inflows, Bitcoin’s April 2024 halving, and “the possibility that rates have peaked or are about to peak in the near term.”
Galaxy Digital Makes Huge Deposits in DeFi Protocols
Galaxy Digital has always been a Bitcoin supporter. Recently, the company has taken action on the long-term future of Bitcoin and Ethereum. The level of interest in DeFi protocols for the purpose of investing in cryptocurrencies is a shadow of what it was in 2021, during the peak of the DeFi boom.
Data from DeFi aggregator DeFiLlama puts the Aave protocol’s current total value locked (TVL) at $5.432 billion. This represents a 72% drop from its peak of $19.442 billion in October 2021. However, Galaxy Digital’s DeFi path to going long Bitcoin and Ethereum signals what could be the return of belief in DeFi protocols.
Why Galaxy Digital Bets on Bitcoin and Ethereum
Galaxy Digital has projected an upcoming Bitcoin bull run in one of its recent reports. According to the company, Bitcoin spot ETFs are a better way for mainstream investors to enter the crypto industry than products on the current market. These ETFs could attract billions to Bitcoin, reaching more than $14.4 billion in inflows in the first year of their approval.
With its recent investment move, Galaxy Digital is in a prime position to benefit from Bitcoin inflows. Mike Novogratz, the company’s CEO, also firmly believes that a Bitcoin bull run is just around the corner. Even before BlackRock and other investment companies made one-off applications of Bitcoin EFT, Novogratz pointed to growing adoption in Asia as a potential catalyst for a Bitcoin bull run.
Currently, Bitcoin is trading at $34,194 and looking to take a strong position above $35,000. Ethereum has seen a smaller price increase than Bitcoin in the last week and is trading at $1,786.
On the other hand, both AAVE and COMP reacted when Galaxy Digital went long Bitcoin and Ethereum on DeFi protocols. These tokens also rose by 7.78% and 9.50% respectively in a 7-day period.
By Audy Castaneda
