Crypto market consolidation may be nearing the end of the NFT space with unlimited possibilities

NFT gives a glimpse of endless possibilities.

Crypto market consolidation may be nearing the end of the NFT space with unlimited possibilities

Since hitting an all-time high of $64,918 in April, Bitcoin has lost nearly 50% of its gains. Other cryptocurrencies have seen their prices more than slashed, with some even falling back to pre-bull market prices. However, what will be the investment outlook for the blockchain and cryptocurrency markets?

In 2020, the sudden outbreak of the New Crown Pneumonia epidemic forced the Federal Reserve to readjust its policy. After cutting interest rates by 50 basis points in early March 2020, the Fed lowered rates to close to zero and then started an unprecedented money printing spree.

However, central banks in other countries around the world followed the Fed and eased monetary policy. This has directly led to a major bull market in the history of cryptocurrencies.

Since the Fed and other central banks went on a money printing spree, the prices of many investment products, including cryptocurrencies, have soared, and people have been immersed in the economic “flooding” of countries around the world.

Bitcoin has lost nearly 50% of its gains since hitting an all-time high of $64,918 in April. Other cryptocurrencies have seen their prices more than slashed, with some even falling back to pre-bull market prices. However, what will be the investment outlook for the blockchain and cryptocurrency markets?

Is Bitcoin still worth investing in?
The most significant factor in Bitcoin’s previous price spike came from the macroeconomic environment, which created the perfect conditions for the Bitcoin bull market to take hold.

Bitcoin is no longer a speculative asset, but has become a valid reserve asset. For bitcoin holders, the bigger concern is its long-term growth.

During the recent shakeout, bitcoin whalers appear to be buying in a big way, which could lead to optimism that the sell-off may be nearing its end.

Bitcoin whalers have been buying bitcoin since May, when the price fell below the $40,000 mark, accumulating nearly $2 billion in bitcoin so far, according to cryptocurrency analytics firm Santiment.

Yesterday’s drop could signal a new turning point. Bitcoin’s current support level is $30,000, having briefly fallen below $30,000 during last month’s plunge. A puncture in that price would likely trigger a new wave of selling.

Bitcoin held on cryptocurrency exchanges saw significant outflows on June 7, suggesting that more traders now want to increase their holdings of bitcoin.

According to Glassnode data, there were 41,441 BTC inflows and 63,992 outflows on cryptocurrency exchanges on June 7, for a net outflow of 22,551 BTC, worth about $730 million, a new high since November 2020.

The large number of bitcoin outflows reflects the decision of traders to hold bitcoin. This means that the bitcoin spot market will not face much selling pressure.

However, there is still a risk that bitcoin will continue its downward spiral. Mike McGlone, a Bloomberg industry research analyst, said, “The June 8 decline could signal a new turning point. Bitcoin’s current support level is $30,000, having briefly fallen below $30,000 during last month’s plunge. Once that price is penetrated, it will likely trigger a new wave of selling.”

As interest rates rise in the future, or are tapered, it is possible that the crypto market could be affected. However, the Federal Reserve has shown no signs of intending to raise rates or begin tapering anytime soon.

DeFi’s huge potential should not be underestimated
DeFi has been exploding since mid-2020 and has quickly grown into a $100 billion market cap market whose influence can no longer be ignored. With a total locked-in value (TVL) of up to $100 billion to date, DeFi has fallen back somewhat and is believed to be able to reach the trillion dollar level in the future, with DeFi still in the beginning stages of development.

At first, traditional industry players’ perception of the crypto space and DeFi was only at the level of “hype” and “sky-high returns”. After taking a closer look at this emerging industry, many people are starting to realize the huge potential of DeFi in the future.

Over the past year, DeFi’s growth has shown that there are more possibilities for DeFi than just speculation. At an offline event in Hangzhou organized by Cointelegraph Chinese, Belinda, Head of DAOventures China, said

Analogous to traditional finance, on-chain financial assets are constantly evolving and growing. We can see that there are now decentralized exchanges, lending and stable coins in the DeFi track, and there are some representative projects in these tracks, and their development shows that DeFi has real practical landing and application value.

After a sharp adjustment in the crypto market on May 19, a large number of DeFi protocols experienced extreme stress tests in the plunge and also suffered massive liquidation. Subsequently, DeFi protocols, mainly the Coinan smartchain, were attacked by hackers one after another, with losses totaling hundreds of millions of dollars. according to Alex, founding partner of HOT Labs, “The problem DeFi is currently trying to solve is anti-hacking as well as some problems of the team itself.”

DeFi is a new blockchain-based model for decentralized financial services. the DeFi protocol uses smart contracts to implement various functions found in the traditional financial industry, such as derivatives, lending, trading, etc.

The birth of DeFi is in some ways a challenge to traditional finance, giving skeptics the opportunity to challenge and reinvent finance and benefit gainers new opportunities to gain wealth.

Going forward, DeFi’s evolutionary path will be extremely winding, and it is still an even earlier market with challenges unfolding, including regulatory issues, security concerns and more.

A&T Capital VP Todd noted that DeFi is doing quite well now, with a lot of infrastructure, but if you compare DeFi now to the traditional world, a lot of the finer points are still missing. He adds.

The whole DeFi track is to some extent more of a preference for the asset and derivatives track. If you can put the traditional stuff on DeFi, then DeFi, which is now a $100 billion market cap, can grow to a trillion market cap

2021 is the year when NFT really rises to the top. In less than a year, NFT has entered the mainstream with unstoppable momentum, and its average volume increased by nearly 300% between January and the end of May.

In March and April of 2021, NFT was a global sensation, with major media headlines reporting on the ever-record-setting NFT volume, in addition to the ongoing launch of one-of-a-kind digital artifacts by many well-known companies in traditional industries, which have captured the public’s attention.

Recently, the NFT space has been cooled down as the crypto market has cooled, with NFT volumes declining for the second consecutive month. At the same time, wallet activity is also trending downward, with the number of active wallets on the NFT market peaking at the end of March and then dropping by more than 40% in May and June, due to falling values combined with the high transaction fees on the ethereum network turning traders away, according to Cointelegraph.

This suggests that the NFT mania has calmed down somewhat, with the decline in active wallets happening in tandem with a drop in sales across the sector and wallets being traded for cheaper NFT.

Put another way, this may help remove a lot of the bubble from the NFT market and bring it to a more sustainable and healthy stage of development, rather than just hype. Traditional businesses have taken notice and embraced many solid value propositions and use cases for NFT.

What Bitcoin is to blockchain is a revolution in financial sovereignty, and what NFT is to blockchain is more of a revolution in digital asset ownership,” says Kirin Fund Investment Manager Zihua. Today the total market capitalization of the crypto industry is less than $2 trillion, and if traditional financial funds can enter the blockchain industry, blockchain ecological development can reach a better height and dimension.”

In fact, a large part of the NFT boom is due to the soaring price of cryptocurrencies. the value of NFT has risen as cryptocurrencies have risen, and the high price has attracted the attention of industry and laymen as well as a large number of users to enter.

For experienced investors in the cryptocurrency space, NFT is a quality investment target in addition to digital currencies, and the emergence of NFT provides a new option for investors’ asset allocation.

Compared with traditional collectibles, NFT has stronger financial asset attributes.7 O’Clock Capital leek essence believes that there are many mainstream markets recognizing NFT this year. nft solves the liquidity problem well. One is more bullish on the lending collateral of NFT, which can more efficiently increase the utilization of NFT funds.

The performance of the crypto market will certainly greatly affect the development of the NFT sector, but NFT is not entirely dependent on the rise and fall of cryptocurrency prices, the scarcity behind it is the real determinant of value. Owning an NFT means having a claim of ownership over the underlying asset.

Paul Song

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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