Bitcoin is in price discovery and every day sets a new record. But despite rising prices well above the previous record, altcoins have barely moved by comparison.
However, traditional finance will soon increase and diversify earnings, and when they do, a chartered financial analyst claims it will be in DeFi tokens, not Ethereum or other altcoins.
Analyst: Traditional Bitcoin Investors To Diversify In DeFi
Bitcoin price tapped at over USD 28,000 over the holiday weekend and the crypto market is feverish with FOMO.
Most of the capital and interest has surrounded Bitcoin so far, but all eyes are on altcoins for the eventual “alt season” and the “life-changing wealth” they would bring.
And while Ethereum surfaced over the weekend as Bitcoin cooled, Arca financial analyst and CIO hired Jeff Dorman says it will be DeFi tokens where traditional finances move to the next, and not the highest rank altcoin.
In fact, many altcoins can be left out of this bull run. This is why.
Will Bitcoin profits flow into DeFi tokens? | Source: BTCUSD on TradingView.com
Why Altcoin The season can be very different in this market cycle
Dorman says that traditional financial investors have overcome the ‘impossible bump’ with Bitcoin, but will eventually ‘be drawn to cash flow valuation when given the choice’.
In essence, because these assets also provide additional returns comparable to stock dividends, traditional financial investors will prefer the nontraditional new form of decentralized financing.
Additionally, several altcoins – even those in the ‘bullshit’ top 25 crypto assets by market cap, have had three years to build a project into a product and give investors a reason to come back.
Related reading | Ethereum Transaction Fees Rising Hints in Round Two of DeFi Season
Ethereum may be the foundation of DeFi dapps, but rising network costs every time the technology is used, it becomes clear that it cannot be scaled. This is less important to Bitcoin, but since Ethereum is about utility, the cost is important.
Other altcoins are still buried in negative sentiment, have an army of sellers waiting to dump once they turn a profit again, and even big assets like XRP are now out of the way. Bitcoin forks have also proved useless compared to the real deal by an investor capital vote.
For all these reasons, and more, DeFi will shine in the upcoming bull market and be especially attractive for traditional financing.
Featured image from Deposit Photos, Charts from TradingView.com