DeFi season could end as Bitcoin and Ether pack their bags...

With the price of Bitcoin successfully breaking the $ 12,000 barrier after PayPal announced it would venture into digital assets, October is meeting the excitement that September failed to provide. And with on-chain and market data continuing the bullish signals for Bitcoin (BTC), experts believe a 2017-style rally may be on the way.

The price of Ether (ETH) has also rebounded, although confidence in DeFi is starting to falter as industry growth and hype slows. DeFi has been the main driver of the popularity of cryptocurrencies in 2020, but now, other digital assets seem poised to start thriving and could reach sizable levels by the end of the year.

What about Bitcoin?

According to a recent report by Finder – an online comparison resource – with 30 industry experts, Bitcoin’s price is likely to hit $ 14,283 by the end of the year. And according to Finder cryptocurrency editor Andrew Munro, Bitcoin’s reputation as a reliable store of value is the main reason behind the generally bullish outlook. He told Cointelegraph:

“Many panelists noted that BTC is increasingly finding a place in traditional portfolios and is being bought by both institutional and retail investors as a hedge against inflation. Given the unprecedented quantitative easing efforts made by central banks from around the world, some panelists speculated that BTC would become a widely adopted ‘store of value’ asset. “

Other experts have cited numerous reasons for Bitcoin’s price rally, namely an increasingly clear regulatory framework in the digital asset market and the numerous setbacks associated with Fiat currencies such as inflation and negative rates.

While the panel mean predicted a Bitcoin price of $ 14,283 by the end of the year, other predictions point to a much higher price, especially considering the famous stock-to-flow model created by the anonymous analyst PlanB.

Can Ethereum keep up?

While Bitcoin is starting to show signs of strength over other cryptocurrencies, With growing dominance of trading and market capitalization, industry participants also have a positive outlook on Ether, averaging $ 513, up 40% at the end of the year. However, in the long term, experts are not so sure about the sustainability of Ether. Munro said: “The most commonly cited factor behind Ether’s short-term bullish predictions was the expected launch of Ethereum 2.0 before the end of the year, and the impact of staking on circulating supply.“.

Ethereum has seen its popularity rise throughout 2020 due to the rise of DeFi, but some skepticism is being expressed about the outlook and long-term sustainability of DeFi. Although many await the launch of Ethereum 2.0, its completion can take years. According to Jonathan Hobbs, author of The Crypto Portfolio and former digital asset fund manager, told Cointelegraph that is one of the reasons for Bitcoin’s positive returns:

“The plays on Defi got too speculative at the beginning of the year, as they usually do in this industry. We can see some of those flows now moving back towards bitcoin, with bitcoin’s dominance trending up after the sale at the DeFi sector “.

DeFi loses power

As the alt-season gains in DeFi trickle back to Bitcoin, the long-term sustainability of Decentralized Finance may be in doubt. In fact, a CryptoCompare survey asked 26 exchange operators at the top trading venues about the future of decentralized exchanges, and only 7.7% found it likely that DEXs will outperform centralized exchanges within two years.

It’s clear that DEX activity is slowing down, but some believe this is really good in the long run. Lanre Jonathan Ige, a researcher at Amun AG – issuer of products traded on cryptocurrency exchanges in Europe – told Cointelegraph:

“DeFi’s decline in immediate publicity will be disappointing for short-term traders, but is likely to be good overall for the industry. The summer bubble was not sustainable, but it did show that various aspects of DeFi (lending, trading, DAO) are really useful for particular use cases. “

While sustainability appears to be the main obstacle to any long-term success of Decentralized Finance, both in terms of the benefits of DeFi and the technical aspects of Ethereum, others have cited a shady crypto industry, complicated interfaces and a general lack of popularity as deterrents to DeFi’s continued growth. Munro stated: “73% of the panel said that ‘scams, excessive hype and market manipulation’ were a key obstacle to DeFi’s growth, with some comparing DeFi to the ICO boom in 2017“.

However, many remain hopeful in DeFi. In fact, most of the panelists in Finder’s crypto report said that DeFi apps will likely continue to grow steadily over the next 12 months in terms of locked value and number of users. Ilya Abugov, Principal Analyst at DappRadar also believes this to be the case, telling Cointelegraph: “There is less media hype on DeFi right now. There was a lot of buildup in the summer so now there is a sober moment.“

Institutional interest is increasing

While DeFi may have been the catalyst for the summer’s crypto activity, institutional interest may be the driving force for Bitcoin to move forward, according to Lanre, especially as large corporations like MicroStrategy, Stone Ridge, and Square are getting involved now.

The stock traders consulted in the CryptoCompare survey believe that this is also the case, since 92.3% affirm that there will be an increase in institutional investment in digital assets in the next two years. According to Hobbs, the scarcity and deflationary nature of Bitcoin are some of the factors that influence the interest of institutions in investing in digital assets: “Ninety percent of the world’s bitcoin has already been mined. Yet ninety percent of the world’s dollars have definitely not been printed. I think this narrative is starting to get more attention from institutional actors“.

Meanwhile, some institutions are still betting on the DeFi sector, with Pantera Capital recently revealing during a webinar that DeFi will be at the center of the next bull rally. But while many still believe in DeFi, most seem to think that DeFi’s price hike cycle is already done and that the industry’s growth will be slower, especially since Ethereum is capable of scaling.

While the outlook is generally positive, many remain concerned about the latest regulatory news such as the US lawsuit against BitMEX and the UK Financial Conduct Authority’s ban on crypto derivatives for sale. retail. Will further regulatory restrictions follow, or is it clear that from now on they will navigate for Bitcoin and cryptocurrencies?

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