By Facundo Zamora, CEO Finanflix and Juan Ignacio Murua, CFO Finanflix
The announcement of Blackrock’s Bitcoin ETF (NYSE: BLK) has caused the market cap of Bitcoin (CRYPTO: BTC) to skyrocket, surpassing one trillion dollars. This is a monumental achievement, as even the combined market caps of major corporations like Coca-Cola (NYSE: KO), Disney (NYSE: DIS), AMD (NASDAQ: AMD), and Intel (NASDAQ: INTC) fall short of Bitcoin’s valuation. This surge not only demonstrates the market’s confidence in Bitcoin following Blackrock’s endorsement, but also highlights its growing influence in the financial world. This has also led to other funds like Fidelity and Templeton following suit.
The market has a history of accurately pricing in future events, and with Bitcoin reaching an all-time high right before its next halving, we are witnessing this trend once again. The current market excitement over BTC surpassing $73,000 is not the same as it was at $69,000 earlier this year, with a refreshed market and a declining projection for the Fed funds rate. It’s worth noting that Blackrock has been purchasing over $45 million worth of BTC daily.
Based on past trends, the cryptocurrency market has seen growth of 10x to 50x after each halving. Additionally, we are yet to see an approval for an Ethereum ETF, which Blackrock also presented.
Ethereum (CRYPTO: ETH) is a crucial blockchain infrastructure for building enterprise applications. Companies like J.P. Morgan (NYSE: JPM) own applications like Infura and Consensys, highlighting Ethereum’s potential for growth. It’s not far-fetched to imagine Ethereum reaching a trillion-dollar market cap in the short to medium term, potentially driving its price above $10,000 per ETH. This could lead to a change in the traditional theory of capital migration in the crypto market, where money flows from BTC to ETH, and then to high-cap, low-cap, and altcoins. Ethereum may chart its own independent trajectory this time.
Our analysis at Finanflix suggests that as activity on Ethereum’s blockchain increases, the Ethereum token becomes more deflationary, influencing DeFi behavior.
After a surge in Ethereum’s brand and token, we can expect a large portion of capital to move to DeFi protocols built on its blockchain. Initially, Ethereum’s infrastructure may struggle to handle the influx of transactions, leading to an increase in activity on Layer 2 protocols like Arbitrum (CRYPTO: ARB), Optimism (CRYPTO: OP), and Polygon (CRYPTO: MATIC). This will put upward pressure on their prices, as their tokens are necessary for paying fees. We have seen these protocols experience price returns of over 1000%, and it wouldn’t be surprising to see a repeat of this trend under these circumstances.
A closer look at the decentralized applications (DApps) running on Ethereum could reveal significant price discovery events. For example, Uniswap (CRYPTO: UNI), Ethereum’s leading decentralized exchange, may surpass $100 per token, and AAVE (CRYPTO: AAVE), Ethereum’s primary lending protocol, may reach $1000.
As for low-cap protocols and meme coins/altcoins like Verasity and Arkham, the potential for returns is uncertain. It’s important to remember that during a bull market, the market can become irrational.
Today, the total value locked in DeFi is over $100 billion, and the ecosystem is much more developed, with protocols generating revenue. This sets a new precedent for DeFi, elevating it to new levels of validation and trust. The opportunity cost of skepticism in these times may be too high.
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This article DeFi’s New Dawn: Ethereum’s Surge Sets Stage for Unprecedented Growth originally appeared on Benzinga.com
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