A popular crypto analyst says three coins that caught fire in the DeFi craze and retraced during Bitcoin’s big rally may have hit a bottom.
The pseudonymous trader known in the industry as Flood points to Aave (AAVE), Thorchain (RUNE) and Solana (SOL) as a trio of assets that appear to have upside potential.
The trader tells Luke Martin on The Coinist Podcast that he felt he was a bit late to the most recent Bitcoin price action, which he thinks is representative of the market overall.
“I didn’t have as much Bitcoin exposure as I would’ve liked on this move up, and I think that’s a representation of the market as a whole.
A lot of people got caught up in stables, got suckered into these attractive protocols that seemed to have sustainable inflation rates and return on parking equity in there, and then they get slapped in the face by Bitcoin. Luckily, the way I’ve constructed my personal portfolio is that I always have a certain allocation of Bitcoin so I don’t get burned too bad on these moves up.”
The degree of risk in DeFi projects will increase as innovation in the space increases, says Flood.
“My current view on DeFi is [that] I’m not technical enough to understand if Ethereum layer two scaling is possible, and when you look at a lot of these protocols that have actual infrastructure, that stuff is being built [on] and is very useful, for example Synthetix and Aave especially… These kinds of permissionless protocols that have usable infrastructure are good for now but you can see there is a lot of danger with innovation in terms of this flash-lending type stuff and the potential for arb from platform to platform…
As you can see with Harvest and with these other protocols where it’s kind of a protocol inside of a protocol, utilizing another protocol, and then it’s like an aggregate. When something breaks in the market, then that can have residual effects into stuff that you wouldn’t necessarily think had any correlation or any risk.”
Flood also notes that institutional investors are solely focused on Bitcoin.
“Big firms are not going to be like, ‘What’s our DeFi play? What’s our $50 million market cap play?’ They’re going to say… ‘What’s our Bitcoin play?’
I think that’s something that I think people don’t realize. [The] people who are looking at crypto in general, the first thing they always look at is Bitcoin. It’s the flagship. It’s the prototype.
It’s what has expanded and stood the test of time – what the most infrastructure is built around, and people say, ‘Oh, it’s Boomer tech, oh it can’t really be utilized, it’s this and that,’ but at the end of the day it’s hard money, and firms and people that are looking at Bitcoin right now are pretty price agnostic because they’re looking at the success that MicroStrategy and a couple of other firms have had with buying Bitcoin and what that has done for them.”
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