Analyst: Post Bitcoin, Traditional Finance Will Flock To DeFi, Not Ethereum

0
15

Bitcoin is in price discovery and each day sets a new all-time high. But despite the soaring prices well above the previous record, altcoins have barely moved in comparison. 

However, traditional finance will soon move profits and diversify, and when they do, one chartered financial analyst claims it’ll be into DeFi tokens, and not Ethereum or other altcoins. 

Analyst: Traditional Bitcoin Investors To Diversify Into DeFi

Bitcoin price tapped over $28,000 over the holiday weekend, and the crypto market is feverish with FOMO. 

Most of the capital and interest has surrounded Bitcoin thus far, but all eyes are on altcoins for the eventual “alt season” and the “life-changing wealth” they’re said to bring. 

Related Reading | Prelude To Altcoin Season: Ethereum Active Addresses Revisit ‘DeFi Summer’ Highs

And while Ethereum popped over the weekend as Bitcoin cooled off, chartered financial analyst and CIO at Arca Jeff Dorman says it’s going to be DeFi tokens where traditional finance turns to next, and not the top-ranked altcoin. 

In fact, many altcoins might be left out of this bull run. Here’s why. 

Will Bitcoin profits flow into DeFi tokens? | Source: BTCUSD on TradingView.com

Why Altcoin Season Could Be Very Different This Market Cycle

Dorman says that traditional finance investors got over the “impossible to value hump” with Bitcoin but will ultimately “gravitate toward cash flow valuation when given the choice.”

Essentially, because these assets also come with added yields similar to stock dividends that traditional finance investors will prefer the untraditional new form of decentralized finance. 

Beyond this, several altcoins — even those in the “nonsense” top 25 crypto assets by market cap, have had three years to build a project into a product and give investors a reason to come back. 

Related Reading | Ethereum Transaction Fees Rising Hints At DeFi Season Round Two

Ethereum might be the foundation of DeFi dapps, but rising network fees each time the technology is put to use highlights its failure to scale. This is less important for Bitcoin, but because Ethereum is about utility, fees matter.

Other altcoins are still buried in negative sentiment, have an army of sellers waiting to dump once they’re in profit again, and even major assets like XRP are now out of the way. Bitcoin forks have also proven to be useless compared to the real deal by a vote of investor capital. 

For all these reasons and plenty more, DeFi will shine during the coming bull market, and will be especially attractive for traditional finance. 

Featured image from Deposit Photos, Charts from TradingView.com

Suggested Posts