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With Bitcoin’s price successfully breaking through the $ 12,000 barrier after PayPal announced it would be venturing into digital assets, October is delivering the excitement that September failed to deliver. And with chain and market data continuing to show bullish signals for Bitcoin (BTC), experts believe a 2017-style rally may be on the way.
The price of Ether (ETH) has also increased, although confidence in decentralized finance is starting to falter as the growth and hype of the industry is slowing. DeFi was the main starting point for the popularity of cryptocurrencies in 2020, but now, other digital assets appear to be poised to start thriving and could reach considerable levels by the end of the year.
What about Bitcoins?
According to a recent report from 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’s 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 panel members noted that BTC is increasingly finding a place in traditional portfolios and is being bought by institutional and retail investors as a hedge against inflation. Given unprecedented quantitative easing efforts by central banks around the world, some panel members speculated that BTC would become a widely adopted “store of value” asset. “
Other experts have cited numerous reasons for a rally in Bitcoin’s price, namely an increasingly clear regulatory framework in the digital asset market and the many setbacks associated with fiat currencies, such as inflation and negative rates.
While the panel average predicted a Bitcoin price of $ 14,283 by the end of the year, other predictions point to a much higher price, especially considering the popular stock-to-flow model created by anonymous analyst PlanB.
Can Ethereum Keep Up?
While Bitcoin is starting to show signs of strength relative to other cryptocurrencies, as trade dominance and market capitalization rise, industry participants also have a positive view on Ether, with a panel average of $ 513, a 40% increase by the end of the year. However, in the long run, experts aren’t so sure about Ether’s sustainability. Munro said, “The most commonly cited factor behind Ethereum’s near-term bullish predictions was the expected launch of Ethereum 2.0 before the end of the year and the impact of staking on the supply in circulation.”
Ethereum has seen increased popularity over the course of 2020 due to the rise of DeFi, but some skepticism is expressed about DeFi’s long-term outlook and sustainability. While many are hoping for the launch of Ethereum 2.0, it could take years to finalize it. According to Jonathan Hobbs, author of The Crypto wallet and a former digital asset fund manager told Cointelegraph that’s one of the reasons for the positive returns on Bitcoin:
“Defi’s games became overly speculative earlier this year, as they often do in this industry. We can see some of these flows shifting to bitcoin, with bitcoin dominance trending higher after the DeFi sell-off. ”
DeFi loses power
As the profits from the DeFi alternative season fall back into Bitcoin, the long-term sustainability of decentralized finance may be called into question. In fact, a survey by CryptoCompare asked 26 exchange operators in major trading venues about the future of decentralized exchanges, with only 7.7% believing that DEXs are likely to outstrip centralized exchanges in two years.
It is clear that DeFi activity is slowing down, but some believe this is indeed a long-term asset. Lanre Jonathan Ige, a researcher at Amun AG – an issuer of exchange-traded cryptocurrency products in Europe – told Cointelegraph:
“The softening of the immediate hype for DeFi will be disappointing for the trader in the short term, but overall it’s probably good for the industry. The bubble of the summer wasn’t sustainable, but it showed that various aspects of DeFi (lending, trading, DAO) are indeed 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 returns on DeFi and the technical aspects of Ethereum, others have cited a shady cryptocurrency industry, complicated interfaces, and a general lack of popularity as a deterrent to DeFi’s continued growth. Munro said: “73% of the panel said that ‘scams, excessive publicity and market manipulation’ were a key obstacle to DeFi’s growth and some compared DeFi to the ICO boom in 2017” .
However, many remain confident about DeFi. In fact, most of the speakers in Finder’s cryptocurrency report said DeFi applications will likely continue to grow steadily over the next 12 months in terms of locked value and number of users. Ilya Abugov, chief analyst at DappRadar, also believes this to be the case, telling Cointelegraph: “There is less media hype in DeFi right now. There was a lot of buildup in the summer, so now there’s a bit of a hangover. “
Institutional interest in recovery
While DeFi may have been the catalyst for the crypto business of the summer, institutional interest could be the driving force for Bitcoin going forward, according to Lanre, especially as big companies like MicroStrategy, Stone Ridge and Square are now involved.
Exchange traders questioned in the CryptoCompare survey also believe this is the case, with 92.3% saying there will be an increase in institutional investment in digital assets over the next two years. According to Hobbs, Bitcoin’s scarcity and deflationary nature are some of the factors influencing why institutions are taking an interest in investing in digital assets: “Ninety percent of the world’s bitcoin has already been mined. Ninety percent of the world’s dollars, however, have certainly not been printed. I think this narrative is starting to take hold more with institutional actors. “
Meanwhile, some institutions are still betting on the DeFi sector, with Pantera Capital recently disclosing during a webinar that DeFi will be at the center of the next hike. But while many still believe in DeFi, most seem to think the DeFi pricing hype cycle is over and slower growth for the industry will follow, especially as Ethereum is able to scale.
While the outlook is generally positive, many are still concerned about the latest regulatory news, such as the US lawsuit against BitMex and the United Kingdom Financial Conduct Authority’s ban on cryptocurrency derivatives for retail. Will further regulatory constraints follow or is it clear that the transition to Bitcoin and crypto is clear from now on?
