Sep 2, 2020 13:28 UTC
Sep 2, 2020 at 13:40 UTC
DeFi Turmoil Proves the Power of Bitcoin; Correction Incoming – Novogratz
The present macroecomic backdrop, as well as the frenzy surrounding decentralized finance (DeFi), has established just how “powerful” bitcoin (BTC) is as a store of worth, conferring to Mike Novogratz, founder & CEO of Galaxy Digital. Nevertheless, he also warned that the DeFi frenzy is starting to look like the initial coin offering (ICO) boom of 2017 & that alteration could be in the scenario.
The newest warning from Novogratz came in an interview with BNN Bloomberg yesterday, where the former Goldman Sachs partner held that he trusts BTC has indeed proceeded pretty well in the face of what he termed “selling pressure” from speculators beholding to make quick proceeds in the DeFi space:
“A lot of the traditional crypto people are selling their bitcoin, buying the sexier objects. & so, in this move, this mania that we see in decentralized finance, it’s pushing the ethereum price up because it’s built on the Ethereum network,” the famous crypto bull said.
Working in more detail, Novogratz elucidated that the popularity of DeFi is “probably putting a little weight on bitcoin,” & that this
“tells you how powerful bitcoin is when even with that selling pressure it’s still going up based on the macro story.“
“The new bitcoin buyer is an institutional buyer, and it’s a high net, the worth buying. They’re coming in methodically & slowly, & they’re not stopping, & so that’s keeping the bitcoin price up,” Novogratz held.
By pixel time (UTC 10:23), BTC trades at USD 11,731 & is down by 1.6 percent in a day, trimming its weekly gains to less than 3 percent. The value is also up by 5.5 percent in a month & almost 14 percent in a year. ETH is practically unchanged today, trading at USD 469. It jumped by 22 percent in a week & 24 percent in a month. The price rallied by 167% in a year.
Mentioning the existing state of DeFi, Novogratz held that the whole industry right now still “is a sandbox,” even with it getting liquidity like it was “an adult industry.”
“I lived through & profited from the 2017 crypto bubble, & this feels somewhat reminiscent to it,” Novogratz said, adding that he still thinks DeFi is going to be with us for longer than the initial coin offerings (ICOs) of 2017.
“I think we are building infrastructure […] Compound might exist in 20 years, we might trade interest rates not at JPMorgan but on Compound,” the crypto enthusiast said, before urging people new to space to “be very careful.“
Also, he said that he’s “a little worried that we’re going to have a big correction in a lot of risky assets soon,” but the investor doesn’t expect that this correction will last for long. In the meantime, a separate report likened the current DeFi frenzy to the ICO boom of 2017, saying that “there’s little reason to expect that investors will fare better this time.” Nevertheless, the report acknowledged that some of the DeFi apps in use currently “have shown some promise.”
“It sure appears as a speculative pump & dump,” analyst Mike McGlone at Bloomberg Intelligence was quoted as saying. “This, to me, is part of the problem for the broad crypto market advancement – just too much supply, competition & ease of entry.