As the price of Bitcoin successfully broke the $ 12,000 barrier after PayPal announced it would venture into digital assets, October is responding to the excitement that September failed to provide. And with the chain and market data continuing to show bullish signs for Bitcoin (BTC), experts believe a 2017-style rally may be underway.
The price of ether (ETH) has also picked up, although confidence in decentralized finance is starting to shake as the industry’s growth and hype slows down. DeFi was the primary trigger for the cryptocurrency’s popularity in 2020, but now other digital assets look set to start thriving and could reach massive heights by the end of the year.
What about Bitcoin?
According to a recent report from Finder – an online comparison resource – featuring 30 industry experts, the price of Bitcoin is expected 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 primary reason behind the generally bullish outlook. He told Cointelegraph:
“Many panelists noted that BTC is increasingly finding its place in traditional wallets and being bought by institutional and retail investors to hedge against inflation. Given the unprecedented quantitative easing efforts of central banks around the world, some panelists speculated that BTC would become a widely adopted “store of value” asset.
Other experts cited many reasons for a rise in the price of Bitcoin, including an increasingly clear regulatory framework in the digital asset market and the many setbacks associated with fiat currencies, such as inflation and rates. negative.
While the panel average predicted a Bitcoin price of $ 14,283 by the end of the year, other forecasts point to a much higher price, especially given the famous stock-flow model created by the anonymous analyst. Plan B.
Can Ethereum keep up?
As Bitcoin begins to show signs of strength relative to other cryptocurrencies, with increasing dominance in trade and market capitalization, industry participants also have a positive outlook on Ether, averaging $ 513 for them. panelists, an increase of 40% by the end of the year. However, in the long run, experts aren’t so sure about Ether’s durability. Munro said, “The most frequently cited factor behind Ethereum’s near-term bullish forecast was the expected launch of Ethereum 2.0 before year-end and the impact of staking on circulating supply.”
Ethereum has seen increased popularity throughout 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 Ethereum 2.0 to launch, it can take years to finalize. According to Jonathan Hobbs, author of The crypto wallet and a former digital asset fund manager, told Cointelegraph that this was one of the reasons for Bitcoin’s positive returns:
“The Challenge games got too speculative earlier this year, as they often do in this industry. We can see some of these flows now returning to bitcoin, with bitcoin’s dominance tending to increase after DeFi’s sale.
DeFi loses power
As the DeFi alt season profits return to Bitcoin, the long-term sustainability of decentralized finance may be called into question. In fact, a CryptoCompare survey asked 26 stock traders from major trading platforms about the future of decentralized exchanges, with just 7.7% believing that DEXs will likely overtake centralized exchanges in two years.
It’s clear that DeFi business is slowing down, but some think it’s really good in the long run. Lanre Jonathan Ige, researcher at Amun AG – an issuer of cryptocurrency exchange traded products in Europe – told Cointelegraph:
“The softening of the immediate hype for DeFi will be disappointing for the trader in the near term, but it’s probably good for the industry overall. The summer bubble was not sustainable, but showed that various aspects of DeFi (lending, trading, DAO) are in fact 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 crypto industry. , complicated interfaces, and a general lack of popularity as a deterrent to the continued growth of DeFi. Munro said: “73% of the panel said that ‘scams, excessive hype and market manipulation’ were a major obstacle to DeFi’s growth, and some compared DeFi to the ICO boom in 2017.
Still, many remain optimistic about DeFi. In fact, the majority of the Finder’s Cryptocurrency Report panelists said DeFi apps are likely to continue to grow steadily over the next 12 months in terms of value locked and number of users. Ilya Abugov, senior analyst at DappRadar also believes this is the case, telling Cointelegraph: “There is less hype in DeFi right now. There’s been a lot of build-up this summer, so now there’s a sobering moment. “
While DeFi may have been the catalyst for the crypto activity of the summer, institutional interest could be the driving force behind Bitcoin going forward, Lanre said, especially because large companies such as MicroStrategy, Stone Ridge and Square are getting involved now,
Exchange traders polled in the CryptoCompare survey believe this is also 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, the scarcity and deflationary nature of Bitcoin are some of the factors influencing the reasons why institutions are interested in investing in digital assets: “Ninety percent of global bitcoin has already been mined. However, 90% of the world’s dollars certainly have not been printed. I think this story is starting to gain popularity with institutional players.
In the meantime, some institutions are still betting on the DeFi sector, with Pantera Capital recently revealing in a webinar that DeFi would be at the center of the next bullish rally. But while many still believe in DeFi, most seem to think the cycle of DeFi price hype is over and slower industry growth will follow, especially as Ethereum is able to grow.
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 the United States. retail. Will other regulatory constraints follow, or is it clear for Bitcoin and crypto from now on?