Qiao Wang, former head of product for crypto analytics firm Messari, says decentralized finance (DeFi) reminds him of Bitcoin (BTC) and Ethereum (ETH) before the two biggest cryptocurrencies skyrocketed.
In a tweet, Wang compares DeFi to the early days of Bitcoin and Ethereum.
“From an investment perspective, pre-2013 BTC and pre-2015 ETH were one-off asymmetric bets. DeFi pre-2021 is IMO once in a decade (until proven otherwise). If you missed the first two, don’t miss the last. “
While Wang is optimistic about the emerging industry over the long haul, he warns his crew of 30,000 that there are bad actors preying on investors in the space.
“There was a lot of nonsense over the past two months, but don’t let this distract you. Try a dozen or so real products and you’ll get a better idea of how DeFi enables fundamentally new and interesting user behavior.”
Wang’s comments come when Bitcoin gave in to taking profits last week. The correction in the broader crypto market coincided with the downturn in the gold and equity markets. The correlation between BTC and US stocks has a simple explanation, Wang says.
“My best guess as to why BTC correlates with stocks in the short term is that a traditional institution of reasonable size back-tested 2 months (March and April 2020) of data and decided to trade the correlation, fulfilling prophecy. ..
Wang also believes that the positive correlation in shorter time frames indicates that it is related to high-frequency algorithmic trading rather than due to the macro environment.
Why not the prevailing market sentiment or dollar-to-dollar supply / demand, you ask? Take a look at the high-frequency data. The correlation is strong at a very high frequency / short time frame. It is more likely to be algo than discretionary trading. “