Written by Finanflix CEO, Facundo Zamora and Finanflix CFO, Juan Ignacio Murua
since then black rock (NYSE: BLK) announced. Bitcoin (CRYPTO: BTC) ETF, BTC's market cap has skyrocketed and is now over $1 trillion, which is a monumental number. To put this into perspective, even if you sum up the market capitalization of the following major companies, coca cola (NYSE:KO), disney (NYSE:DIS), AMD (NASDAQ: AMD), and intel (NASDAQ: INTC), their total will still fall short of BTC's enormous valuation. This incredible growth not only highlights the high level of market confidence following BlackRock's support, but also highlights Bitcoin's growing influence in the financial world. The waterfall effect is inevitable, and smaller but larger funds like Fidelity and Templeton are following the same path.
The market is rarely wrong when it comes to pricing in future events that are announced, and today we are witnessing the Bitcoin price reach an all-time high just before the next halving, but this has not been the case until now. That's something I've never seen before. The euphoria when BTC rose above USD 73,000 is clearly not the same as the euphoria at USD 69,000 in 2021, when the market was refreshed and the predicted downside path of the federal funds rate was anticipated. Additionally, it is worth noting that BlackRock is currently purchasing over $45 million in BTC every day.
Historically, the cryptocurrency market has grown between 10 and 50 times every time it has halved. And approval of the Ethereum ETF, which BlackRock also proposed, has yet to be seen.
Ethereum (CRYPTO: ETH) provides the critical blockchain infrastructure needed to build enterprise applications. Among thousands of applications, we found Infura and Consensys. Both are owned. JP Morgan (NYSE: JPM). Therefore, it would not be too far-fetched to envision a scenario in which Ethereum could rise past $1 trillion in market cap and its price could exceed $10,000 per ETH in the short to medium term. In this case, we could witness a departure from the traditional crypto theory of capital movement, where funds flow first to BTC, then to ETH, and then to high-cap, low-cap, and altcoins respectively. . This time, Ethereum may chart its own and somewhat independent trajectory.
Analysis at Finanflix concludes that as activity on the Ethereum token’s blockchain increases, the Ethereum token is becoming increasingly deflationary, thereby impacting DeFi behavior.
After the Ethereum brand and token experienced a significant rally, we should expect much of the capital to move into DeFi protocols built on top of its blockchain. Initially, Ethereum's infrastructure will struggle to handle the large increase in transactions. At that time, Layer 2 protocols such as: Arbitrum (Code: ARB), optimism (crypto: OP), and polygon Activity such as (CRYPTO: MATIC) increases rapidly. This puts upward pressure on the price, as the tokens of these protocols are needed to pay fees, and all funds flowing from ETH will naturally gravitate first to the protocols that are closest in terms of usage. To date he has experienced price returns of over 1000%, so it would not be surprising to witness a similar situation under these circumstances.
A closer look at decentralized applications (DApps) running on Ethereum may reveal price discovery events by UNI. uniswap (CRYPTO: UNI), the leading decentralized exchange for Ethereum, over USD 100 per token, or AAVE (CRYPTO: AAVE), Ethereum's leading lending protocol, reaches 1000 USD.
Finally, when it comes to the myriad low-cap protocols like Verasity and Arkham, not to mention meme coins/altcoins, the potential returns are uncertain. You must remember that once a real bull market reaches a cryptocurrency, the market can become completely irrational.
Currently, the total amount locked in DeFi is over $100 billion. But this time, the ecosystem is much more developed, the protocol is generating revenue, and the overall market situation is different than we've seen before. This precedent will likely take DeFi to a new level of validation and trust, and if this happens, we will be witnessing a truly different paradigm. The opportunity cost of skepticism in this day and age may be too high.
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This article, “A new dawn for DeFi: Ethereum's surge sets the stage for unprecedented growth” was originally published on Benzinga.com.
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