Qiao Wang, former head of product of crypto analytics firm Messari, says decentralized finance (DeFi) reminds him of Bitcoin (BTC) and Ethereum (ETH) before the two largest cryptocurrencies skyrocketed.
In a tweet, Wang compares DeFi to the early days of Bitcoin and Ethereum.
“From an investment point of view, BTC pre-2013 and ETH pre-2015 were once-in-a-lifetime asymmetric bets. DeFi pre-2021 is once-in-a-decade IMO (until proven wrong). If you’ve missed the first two, don’t miss the latter.”
Although Wang is long-term bullish on the nascent sector, he warns his crew of 30,000 that there are bad actors preying on investors in the space.
“There was a lot of crap over the past two months but don’t get distracted by these. Try a dozen of real products and you’ll get a better sense of how DeFi enables fundamentally new and interesting user behaviors.”
Wang’s comments come as Bitcoin succumbed to profit-taking last week. The correction in the broader crypto market coincided with the pullbacks in gold and stock markets. The correlation between BTC and US equities has a simple explanation, Wang says.
“My best guess as to why BTC is short-term correlated with stocks is that a reasonably-sized traditional institution did a backtest off of 2 months (March and April 2020) worth of data and decided to trade the correlation, creating a self-fulfilling prophecy.”
Wang also believes that the positive correlation in shorter time frames indicates that it relates to high-frequency algorithmic trading rather than due to the macro environment.
Why not prevalent market sentiment or dollar supply/demand of the dollar, you ask? Well look at the high-frequency data. The correlation is strong at a very high frequency / short time frame. It’s more likely algo than discretionary trading.”