Although Bitcoin and Ethereum are bullish, the decline in the DeFi season seems unstoppable


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After PayPal announced that it would enter the digital asset market, the price of Bitcoin successfully broke through the $12,000 mark. October brought the crypto market and investors the excitement that September failed to bring. As on-chain and market data continue to show signs of bullishness for Bitcoin, experts believe that 2017 may be about to come.

The price of Ethereum (ETH) has also risen, although as the growth of the DeFi industry is slowing, people’s confidence in decentralized finance has begun to shake. DeFi has become the main starter of cryptocurrency popularity in 2020, but now, other digital assets seem to be ready to start to flourish and may reach a fairly high level by the end of this year.

What about Bitcoin?

According to a recent report by Finder involving 30 experts in the crypto industry, the price of Bitcoin may reach $14,283 by the end of the year. According to Finder’s cryptocurrency editor Andrew Munro, Bitcoin’s reputation as a reliable store of value is the main reason for the generally bullish outlook. He told Cointelegraph:

“Many experts point out that Bitcoin is increasingly occupying a place in traditional investment portfolios, and institutional investors and retail investors are buying Bitcoin to hedge against inflation risks. Given the unprecedented quantitative easing measures of central banks around the world, some experts speculate that Bitcoin will Become a widely adopted “store of value” asset.”

Other experts cited many reasons that led to the increase in the price of Bitcoin, namely, the increasingly clear regulatory framework in the digital asset market and many negative factors related to fiat currencies, such as inflation and negative interest rates.

Although the expert group predicts on average that the price of Bitcoin will be $14,283 by the end of this year, other predictions indicate that the price of Bitcoin may be much higher, especially considering the famous stock-to-flow model created by the anonymous analyst PlanB.

Can Ethereum follow the upward trend?

Although Bitcoin has begun to show its dominance over other cryptocurrencies with the growth of Bitcoin’s trading volume and market value, industry participants are also optimistic about Ethereum. Experts predict an average price of $513 by the end of this year. An increase of 40%. However, in the long run, experts are not sure about the sustainability of Ethereum. Munro said: “Behind the short-term bullish forecast for Ethereum, the most frequently mentioned factors are the expected launch of Ethereum 2.0 before the end of the year and the impact of staking on Ethereum’s liquidity.”

Due to the rise of DeFi, Ethereum has become more and more popular throughout 2020, but people have doubts about the long-term prospects and sustainability of DeFi. Although many people hope to launch Ethereum 2.0, it may take several years to complete. Jonathan Hobbs, author of “Cryptocurrency Investment Portfolio” and former digital asset fund manager, said that this is one of the reasons for Bitcoin’s positive return:

“Earlier this year, DeFi was over-speculated, as often happens in this industry. We can see that some of these funds are now flowing back to Bitcoin, and after the DeFi sell-off, Bitcoin’s dominance is on the rise. “

DeFi loses momentum

As the profits of the DeFi copycat festival flow to Bitcoin, the long-term sustainability of decentralized finance may be questioned. In fact, a survey conducted by CryptoCompare asked 26 leading exchange operators about the future of decentralized exchanges, and only 7.7% believed that decentralized exchanges might replace centralized exchanges within two years.

Obviously, DeFi activity is slowing down, but some people believe that this is actually a good thing in the long run. Lanre Jonathan Ige, a researcher at Amun AG, the publisher of European cryptocurrency exchange-traded products, told Cointelegraph:

“The instant hype for DeFi is disappointing for short-term traders, but it may be good for the industry as a whole. The bubble throughout the summer is unsustainable, but it does show all aspects of DeFi (borrowing, trading, DAO) is actually useful for specific use cases.”

Although sustainability seems to be the main obstacle to the long-term success of DeFi, whether it is in the return of DeFi or the technology of Ethereum, others believe that the crypto industry’s bad reputation, complex interfaces, and general lack of popularity hinder The continuous development of DeFi. Munro said: 73% of experts believe that “scams, excessive hype and market manipulation” are the main obstacles to the growth of DeFi. Some people compare DeFi to the prosperous ICO in 2017.

Despite this, many people still have hope for DeFi. In fact, most experts in Finder’s cryptocurrency report stated that the locked-in value of DeFi applications and the number of users may continue to grow steadily in the next 12 months. Ilya Abugov, the chief analyst of DappRadar, also thinks this will be the case. He told Cointelegraph: “The media hype in DeFi is getting less and less. We have accumulated a lot in the summer, so it’s time to wake up.

Institutional interest rebounded

Lanre believes that although DeFi may be a catalyst for summer crypto activities, institutional interest may be the driving force for Bitcoin to move forward, especially because large companies such as MicroStrategy, Stone Ridge and Square are now involved.

Exchange operators in the CryptoCompare survey also believe that the situation is the same. 92.3% of the respondents said that the investment of institutions in digital assets will increase in the next two years. Hobbs believes that Bitcoin’s scarcity and deflation are some of the factors that affect institutions’ interest in digital asset investment: “90% of the world’s Bitcoin has been mined. However, 90% of the world’s US dollars must not be printed. I I believe this statement is beginning to be more and more popular with institutional investors.”

At the same time, some institutions are still betting on the DeFi field. Pantera Capital recently disclosed in a webinar that DeFi will become the center of the upcoming bull market. However, although many people still believe in DeFi, most people seem to think that the DeFi price hype cycle is over, and the slow growth of the entire industry will follow, especially before Ethereum can expand.

Despite the overall optimism, many people are still worried about the latest news related to regulation, such as the US lawsuit against BitMex and the UK Financial Conduct Authority’s ban on retail cryptocurrency derivatives. Will there be more regulatory restrictions next? Will Bitcoin and encryption be smooth sailing from now on?

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