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Data reveals that the total value locked in DeFi lending protocols has surged significantly over the past year, often mirroring Bitcoin’s price movements with remarkable similarity. For example, the chart of DeFi lending TVL from just before late 2021 aligns closely with Bitcoin's price trajectory over recent months, exhibiting patterns like cup and handle formations or double tops that suggest potential breakout scenarios.
The increase in stablecoins such as USDT and USDC plays a vital role here, as these assets are commonly used as collateral for borrowing and leverage within DeFi. Their rising market caps indicate an injection of cryptonative liquidity—funds created, borrowed, and circulated entirely within the crypto ecosystem rather than flowing in from external sources.