Cryptocurrency markets are currently sending strong signals that the innovations emanating from rapidly emerging technologies like decentralized finance or DeFi could shake the global order of banks, money managers and insurance companies.
A recurring theme at the CoinDesk invest: ethereum Economy virtual conference on Wednesday was how much money can be made in the fast-growing digital assets industry.
The discussion about returns and earnings was salted during the technical discussions about protocols and governance systems as well as blockchain arcana such as “Layer 1” and “Layer 2” as well as “Rollups” and “Shards”.
Even traditional market regulators are gradually realizing the growth opportunities that cryptocurrency bulls have been banking on for years.
The technological movement is “obviously revolutionary, and I think at the end of the day it could lead to massive disintermediation of the financial system and traditional players,” Heath Tarbert, chairman of the US Commodity Futures Trading Commission, told the chief content officer by CoinDesk Michael Casey. (Link here to the video interview.)
DeFi, where developers use open source software to build semi-automated lending and trading systems on blockchain networks, has shown its potential in recent months as projects like Compound and Uniswap have attracted billions in crypto-collateral. A number of Yield Farming projects like Yearn.Finance have made it easy to collect additional token rewards to generate fixed income returns in the digital asset markets.
The crypto industry appears to have moved from its larval stage into the pupa: shape is taking shape, but the challenges of growing up have yet to be tackled, from reliability to marketing to scaling to a point where millions of people live Users can be accommodated.
There are great risks, like the blaze outbursts of DeFi projects like SushiSwap over the past few months, the founders of which suddenly decided to cash out tokens at the top of the market which crashed the market and Yam which succumbed to a mistake.
“In many cases, participating in some of these activities can put you at risk of permanent loss of capital,” said Ryan Watkins, senior research analyst at Messari, on one of the panels.
And it is premature to compare the size of cryptocurrencies with the traditional financial system.
“Today 99.9% of the money is still in Fiat,” said Binpen CEO Changpeng “CZ” Zhao in a one-on-one discussion with journalist Leigh Cuen during the CoinDesk conference. “We still need goals.”
These too begin to develop. Bloq, a blockchain infrastructure company led by former CNN.com web developer Jeff Garzik, is launching a product that allows users to make money by buying bespoke “holding pools” of digital assets, CoinDesk’s Jaspreet Kalra reported on Wednesday .
“The future is dynamic portfolios that are expensive to build in traditional finance,” said Tarun Chitra, CEO of Gauntlet, a simulation platform for crypto networks. Its zoom feed was by far the most colorful:
Gauntlets Tarun Chitra speaks on a CoinDesk virtual panel on Wednesday. (CoinDesk)
Another company, Blox, plans to help customers pool Ether (ETH) to exceed a threshold required to “bet” on the Ethereum blockchain. The bet is similar to holding an interest-bearing deposit and will go live with a major upgrade that is supposed to arrive by the end of 2020.
However, the annual return could be between 4.6% and 10.3%, wrote Sebastian Sinclair of CoinDesk. Compare that to the 0.01% offered on a JPMorgan Chase savings account.
In one of the conference’s panels, David Hoffman, founding father of DeFi-focused publication Bankless, outlined the bullish case for airwaves, saying prices could soar from the current $ 380 to $ 10,000 or more.
In a subsequent meeting, Vishal Shah, founder and CEO of crypto derivatives exchange Alpha5, outlined the bearish case, but concluded by saying that prices could double in this scenario.
The ether prices have already tripled this year. The high ratings could just be hype. Or they could be a sign that cryptocurrency traders are looking to the industry to mature.
Bitcoin Watch
Bitcoin daily price chart.
Source: TradingView
According to Wednesday’s Doji candle, the Bitcoin market has become undecided.
Key indicators such as the 14-day index of relative strength remain bullish. Additionally, the five- and ten-day averages tend further north, indicating that the path of least resistance leads to the higher side.
From a macroeconomic point of view, the increasing inventory of global negative interest-bearing debt is an important bullish development for perceived inflation hedges or value-added goods like Bitcoin. “In the future, the search for returns is likely to be a major driver of the Bitcoin price growth and adoption,” Matthew Dibb, CEO of Stack Fund, told CoinDesk in a WhatsApp chat.
Additionally, recent Bitcoin inventory disclosures by payment firm Square and Stone Ridge Asset Management have confirmed the cryptocurrency’s appeal as an alternative asset.
Hence, the odds seem stacked in favor of a continued bull run. In the short term, however, the cryptocurrency remains susceptible to sell-offs in global stock markets. At press time, Bitcoin is trading near $ 11,340 in the red.
Read more: The world’s growing inventory of negative-interest debt is positive for Bitcoin, analysts say
What is hot?
Ethereum’s Vitalik Buterin urges power users to move to Layer 2 scaling. (CoinDesk)
Grayscale (owned by CoinDesk parent company Digital Currency Group) brings in $ 1 billion for all products in the third quarter. (CoinDesk)
The US Department of Justice’s 83-page cryptocurrency enforcement framework is turned upside down prior to international exchanges. (CoinDesk)
Algorand’s new Europe accelerator to fund start-ups with up to $ 500,000. (CoinDesk)
Analogues
The latest on economics and traditional finance
Hopes for a US stimulus package are fading. (CNBC)
The Federal Reserve vice chairman says it is an “open question” whether the US Federal Reserve will have to continue buying government bonds indefinitely. (WSJ)
The pandemic response will push global public debt to record levels, the IMF says. (WSJ)
The world’s largest economies have renewed a program that allows the poorest countries to suspend debt repayment. (WSJ)
The chief financial officers of the top five US lenders have mixed views on the COVID economy. (Reuters)
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