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2020 has been the perfect storm for cryptocurrency. Large amounts of government stimulus, unprecedented action from central banks around the world and decentralised finance (DeFi) have made digital currencies this year's best performing asset. So what's the deal with DeFi? And is Bitcoin still king? We asked 30 panellists for their expert opinions.
Meet our panel
|Michael Conn, chief executive officer, Zilliqa Capital||Ajay Strestha, PhD candidate, University of Saskatchewan||Gavin Brown, the University of Liverpool|
|Sarah Bergstrand, chief operating officer, BitBull Capital||Adel de Meyer, co-founder and leader, DAPS Coin||Joel Kruger, currency strategist, LMAX Group|
|Desmond Marshall, MD, Rouge International and Rouge Ventures||Vetle Lunde, analyst, Arcane Research||Vishal Shah, chief executive officer, Alpha5|
|Tyler Smith, sales manager, BC Bitcoin||David Klinger, co-founder, SpringCapital Investments||Andrew Ballinger, associate, Wave Financial|
|Sukhi Jutla, chief operating officer, MarketOrders||Dr Iwa Salami, University of East London||Aleksandar Kuzmanovic, professor at Northwestern University, and founder at bloXroute Labs|
|Gavin Smith, managing partner, Panxora DeFi Hedge Fund||Fred Schebesta, co-founder, Finder||Edward Hickman, chief executive officer and founder, Anatha.io|
|Lennard Neo, head of research, Stack Funds||Joseph Raczynski, technologist and futurist, Thomson Reuters||Andrew Urquhart, associate professor of finance, ICMA Centre, Henley Business School, University of Reading|
|James Putra, head of product, TradeStation Crypto||David Derhy, cryptocurrency commentator, eToro||Sagi Bakshi, chief executive officer, coinmama|
|John Hawkins, senior lecturer, the University of Canberra||Paul Levy, the University of Brighton||Bilal Hammoud, chief executive officer, NDAX Inc|
|Jason Lau, chief operating officer, OKCoin||Jeremy Cheah, associate professor of cryptofinance and digital investment, Nottingham Trent University||Craig Cobb, managing director and founder, TraderCobb.com|
Bitcoin price prediction
Bitcoin is set to hit US$14,283 by the end of the year, according to the panel average – a 10% increase from the panel's end-of-year forecast in July ($12,948). Of 11 coins included in the study, Finder's panel is most positive on the outlook for Bitcoin.
James Putra, head of product at TradeStation Crypto, is the most bullish on Bitcoin (BTC) with an end-of-year forecast of $60,000. He claims that the price of BTC will skyrocket as it becomes easier for retail investors to trade as more brokerages service the cryptocurrency market.
LMAX Group Currency Strategist Joel Kruger gives the second-highest price prediction of $20,000. However, according to Kruger it won't be a smooth run.
"We think the price could initially be vulnerable to a downturn in global sentiment, much like was seen in March, before ultimately being well supported on the longer-term value proposition as a highly attractive store of value asset."
TraderCobb.com Managing Director Craig Cobb expects the price of Bitcoin to hit $18,000 by December 31st given strong momentum.
" ... there has never been more corporate interest and positivity around Bitcoin since I have been in," he says.
Andrew Ballinger, financial associate at Wave, gives a forecast of $14,000, arguing increased quantitative easing will "top up retail investors."
"With continued uncertainty surrounding the economic recovery, investors may turn to digital currencies over equities, and test the 'digital gold' thesis of Bitcoin further," he says.
Meanwhile Gavin Smith, managing partner at hedge fund Panxora DeFi; Desmond Marshall, managing director at Rouge International; Vishal Shah, CEO at Alpha5; Adel de Meyer, DAPS coin cofounder; and John Hawkins, senior lecturer at the University of Canberra all predicted end-of-year prices at below $10,000.
Shah says BTC is not outperforming to the same levels as other assets and is actually materially underperforming.
"It's in the same box as DXY when it comes to the confusions created by easy-money policies and its effect(s) on assets. In this instance, anyone that is still trumpeting this macro thesis should be worried, as it's not playing out."
Over the next five years, the panel predicts the price of Bitcoin will skyrocket to $148,025 on average — a whopping 3,233% increase from the 2020 end-of-year prediction. However if we remove the most bullish prediction of $2 million, the average price prediction settles to $67,504. Including all predictions, the median 2025 prediction is $37,500.
NDAX Inc. CEO Bilal Hammoud, who predicted a 2025 end-of-year Bitcoin price close to the average at $150,000, chalks it up to major institutions shifting their attitudes.
"Major countries, banks and corporations are starting to invest heavily into Bitcoin as a safe haven and store of value. This trend will only accelerate in the next couple years as we approach the next halving. With only 3M liquid bitcoins, demand will continue to outperform supply and price will adjust accordingly,"
Arcane Research analyst Vetle Lunde thinks BTC will hit $100,000 by 2025, thanks to intense fiscal stimulus:
"This could have dramatic monetary implications in the long run. This has attracted several well-renowned investors to invest in Bitcoin as an inflation hedge. With its known low, fixed inflation rate, Bitcoin provides scarcity in a world filled with abundance," he said.
Associate professor at Nottingham Trent University Jeremy Cheah and Thomson Reuters Technologist Joseph Raczynski think Bitcoin will increase in value significantly, but not to the extent that panellists like Lunde and Hammoud are predicting.
Cheah thinks Bitcoin will be worth around $18,000 by the end of 2025, and Raczynski expects BTC to hit $35,000. Both panellists say the trend toward electronic payments is set to support growth.
" … as the world moves to digital currency, though not the best system, BTC will likely still prove as the original — a very good store of value. First movers often have significant sway. This is likely one of them that's able to keep its position and prominence," says Raczynski.
David Klinger, cofounder of Springcapital Investments, and University of Brighton's Paul Levy think the price of Bitcoin is set to increase by 2025, but not exponentially, with both panellists providing a forecast of $15,000.
"Bitcoin may well be the choice during troubled times, but it has yet to prove itself is a dependable investment for many people. Bitcoin is going to go up but not exponentially," Levy says.
Meanwhile MarketOrders COO Sukhi Jutla, Desmond Marshall and Adel de Meyer aren't expecting Bitcoin prices to move significantly over the next five years, with each providing a forecast within a range of $9,000 to $13,000.
Jutla thinks Bitcoin is relatively stable for a cryptocurrency and will continue to be used. Marshall agrees and expects more widespread adoption but says this could be a double-edged sword.
"More structured products endorsements from government, banks or financial institutions will help push market adoption, but more forces will try to control it, meaning it will still be difficult to boost exponentially," he says.
Dr. John Hawkins gives the most bearish 2025 forecast — just $100. He says Bitcoin will eventually be worthless, but he's not sure when that will happen.
Buy, sell or hodl Bitcoin?
When asked if now is the time to buy, sell or hold Bitcoin, the majority of panellists (54%) say it's time to buy. Some 39% say it's best to hold, while just 7% say it's time to sell.
David Klinger, Joseph Raczynski and Andrew Urquhart, an associate professor at the University of Reading, think now is the time to buy Bitcoin as a hedge against economic instability.
"Hodling has been the rule. However, that order has changed. Buying appears to be a clear option as a hedge against the global economy. With more traditional bankers and financial companies buying it, it seems logical," says Raczynski.
Lunde also says now is the time to buy, but notes timing the market is difficult and thinks the dollar-cost average is the best way to avoid short-term bias.
"By adding to your Bitcoin position monthly, you have a viable strategy to secure a significant Bitcoin exposure while being less sensitive to short-term price fluctuations," he says.
Meanwhile 39% of the panel, including eToro crypto commentator David Derhy, say it's best to hold.
Derhy expects to see another bull run:
"Bitcoin is currently trading around the important support level of $10K. While Bitcoin maintains this level, investors should consider holding, as we're still early in this technology and adoption is growing. I'd expect to see another bull run on crypto prices".
However Adel de Meyer thinks holding Bitcoin is risky. She and Dr. John Hawkins were the only two panellists who say now is the time to sell.
"Right now I think Bitcoin might see a big drop again in value due to the global economic uncertainty and jobless rates around the globe. Keeping Bitcoin right now is a high risk," de Meyer says.
Ethereum price forecast
Panellists predict the price of Ethereum to reach US$513 on average by the end of the year. That's a 54% increase from last quarter's end-of-year prediction of $333.
Several panellists, including BC Bitcoin sales manager Tyler Smith, think traction from use case projects will contribute to higher prices.
"Ethereum has consistently delivered a stable and scalable blockchain solution, with many other projects making use of its infrastructure. This trend will likely continue, making it a good investment opportunity for the future,"
Zilliqa Capital CEO Michael Conn agrees that projects making use of Ethereum's infrastructure will drive the market higher and calls out DeFi specifically, while BitBull Capital COO, Sarah Bergstrand, thinks Ethereum should see more appreciation after the launch of ETH 2.0.
However, de Meyer and Shah think Ethereum could see a drop in value by the end of this year, predicting $250 and $260, respectively.
"There is too much global economic uncertainty, and traders are now all moving to DeFi trading, losing interest in main coins like ETH and BTC," says de Meyer.
Panellists predict the price of Ethereum will reach $2,075 on average in five years' time.
OKCoin COO Jason Lau gives a forecast on par with the panel average at $2,000. He says the growing strength of the Ethereum community will support momentum.
"Ethereum has by far the strongest developer community and most applications deployed. If ETH scaling solutions are successful, its brand power and track record, and ultimately demand, will only grow".
Bergstrand and Putra give the most bullish price prediction of $10,000, with Bergstrand suggesting ETH could become an indispensable cryptocurrency.
Meanwhile Hawkins, Shah and de Meyer think Ethereum will actually lose value over the next five years, each providing a forecast below $300.
Buy, sell or hold Ethereum?
Almost half the panel (48%) say now is the time to buy Ethereum, while 42% say it is best to hold. Just 10% say now is the time to sell.
Anatha.io CEO and Founder, Edward Hickman, Bergstrand and University of Liverpool Professor Gavin Brown say the DeFi boom presents an opportunity to buy more Ethereum.
"ETH is still leading the DeFi movement, and added interoperability could make the Ethererum network the centerpiece of the whole market," says Hickman.
Derhy and Hammoud suggest now is a great time to buy, given ETH 2.0 is under way.
"Ethereum 2.0 is due to go live before the end of the year. With the improvement of the protocol coming and the minimum stake needed (32 ETH) to operate a validator node, Ethereum may see another bull run," says Derhy.
Finder Cofounder Fred Schebesta says it's best to hold for now, given it's impossible to predict how long the strong performance will last.
"Like Bitcoin, Ethereum could well see its market reflect equities. Despite being strong now, there is the question of how long that will last. Those holding ETH will rest well in accumulating more if we do go lower, but it's never easy to sleep when you don't hold an asset that's changing the world month on month, whether reflected in price or not".
Cobb agrees it's best to hold, noting a lot depends on the success of ETH 2.0.
However Hawkins, Shah and de Meyer think now is the time to sell. Hawkins says Ethereum has no underlying value, while de Meyer thinks that DeFi's high fees are putting users off.
Shah acknowledges the increasing demand of Ethereum brought by DeFi, but notes the importance of distinguishing the coin's performance from its actual value:
"Remember, ETH is a conduit. Nobody is buying ETH because of their belief in the superiority of the protocol. To the contrary, you are seeing competing protocols looking to eclipse ETH before it gets to 2.0, a multiyear process.
It's enjoying a sticky first-mover advantage, but now has a negligible moat over competition, making it highly susceptible the moment critical mass begins to shift away from it. DeFi has been a blessing, but it's important not to conflate ETH performance with intrinsic value," he says.
The outlook on DeFi
Many of our panellists note DeFi will play a pivotal role in the success (or failure) of Ethereum, and so we asked about their outlook on DeFi for the year ahead. The majority of panellists (64%) expect DeFi applications to steadily grow in both value locked and user count over the next 12 months.
Hickman is part of that majority and says he is single-handedly onboarding thousands into the DeFi movement through its own efforts at Anatha.
"Taken as a whole, the industry is just too on fire for decentralised finance to let go of it anytime soon. Expect decentralised versions of everything that's ever been made in the legacy financial system, and a whole new series of tools and functions that the legacy financial system simply isn't capable of producing."
Gavin Smith thinks DeFi is at the start of a multiyear bull run.
"The protocols are still in their infancy and have huge potential moving forward," he says.
Lau agrees DeFi will continue to grow, but notes there will be bumps along the way.
"While the longer-term outlook for DeFi is positive, there will be many bumps in the road. However, with banks and other traditional saving vehicles offering near-zero yields, protocols that deliver sustainable returns on staked assets will draw attention from investors," he says.
However, four panellists (13%), including CoinMama CEO Sagi Bakshi, do not expect DeFi to grow over the next year. Bakshi thinks DeFi is growing too fast in an irresponsible and unregulated manner.
"It will implode with a huge loss of users' funds, something like Mt. Gox," he says.
Bergstrand and Kruger are part of the remaining 23% who are unsure, both warning they're concerned about a potential bubble.
"There is a lot of potential in the world of DeFi, and the progress has been astounding thus far. While we believe the growth is there over the coming years, we're concerned about the potential for a bubble burst that compromises growth prospects over the next 12 months, with things having run so far and fast," says Kruger.
While the majority of panellists expect DeFi to grow over the next year, they also all concede there are barriers to growth.
Some 73% say scams, excessive hype and market manipulation will challenge DeFi growth. Half say general cryptocurrency frictions — such as private key management and price volatility — will make it harder for DeFi to grow, while 43% say a lack of public awareness is a major obstacle. Just over a quarter of panellists (27%) say DeFi has a lack of genuine value and real-world applications, which will make it harder for further adoption.
Dr. Iwa Salami from the University of East London is part of the majority forecasting continued growth, but notes some factors will make it harder for DeFi to grow.
" ... DeFi also raises governance, legal and operational risks issues. As in typically decentralised permissionless platforms, it is difficult to hold any particular person or entity accountable for any technological failure that may result in the collapse of the system.
It may also be challenging allocating liability in transactions involving anonymous parties in smart contracts — especially when used to disguise fraudulent activities."
Raczynski also thinks DeFi will continue to grow but says awareness is a barrier.
"The vast majority of people barely even know merely the name of Bitcoin, much less Ethereum, and far less DeFi. It's a subset of a subset of a micro movement. When sovereign nations create their 'digital dollar' and the need for digital wallets, which will require education on a massive scale, then critical mass will hit," he says.
High returns on yield farming
DeFi is currently characterised by enormous but temporary "yield farming" returns. Recent reports suggest even "safe" farming options commonly earn returns equivalent to 100% a year or more. When asked how much longer these high returns can last, 44% expect them to drop off in the next six months, with 7% of those saying it could happen any day now. Just 13% say high returns will last longer than six months. Meanwhile, 37% say it's impossible to predict.
Putra thinks the high returns will last less than six months and warns a liquidity crunch is coming.
"There are a lot of people unfamiliar with margin currently using leverage to drive up returns. Most of the projects are barely tested before being released into the wild. Watch for market structure events that will trigger a fast liquidation of open positions. People are not sure exactly what they own".
Gavin Smith also thinks the returns will last less than six months.
"The reason for the high returns is the underlying risk of a collateralised loan pyramid. As the products become more established, the risks will fall along with the returns," he says.
Edward Hickman and professor at Northwestern and founder of bloXroute Labs Aleksandar Kuzmanovic are part of the minority who say high returns will last longer than six months.
Future of DeFi activities
DeFi activities currently take place on the Ethereum blockchain. However, there are growing alternatives in a move toward blockchain interoperability. So where is the future of DeFi headed? We asked the panel what they expect the landscape to look like 12 months from now.
Some 43% say there will be less than five popular and widely used DeFi ecosystems, while 21% expect to see the inverse, where there are multiple separate popular and widely used DeFi ecosystems.
Derhy thinks there will be a few separate DeFi ecosystems, but only a few will be used regularly by the masses.
"In my opinion, like in any other industry, only some products will be used by millions of users on a daily basis. We may see growing adoption in some products such as Compound or Uniswap in the future, but only few apps will succeed," he says.
Cheah shares a similar sentiment, noting some leaders will rise to the top.
"There will be many DeFi ecosystems, but there will be leaders because of the issue with trust and ease of use. Majority of users are followers of [the] herd. For example, some major cryptocurrencies will lead, so there will be a number of separate but popular and widely used DeFi ecosystems. No one will be able to learn all the different types of ecosystems — information overload."
Meanwhile, under a third of panellists (29%) think Ethereum will continue to dominate the ecosystem, and just one panellist, Sukhi Jutla, thinks the Bitcoin blockchain will dominate.
Gavin Brown thinks Ethereum will dominate and says the rise of alternatives is part of a phase.
"Historical technology innovations are littered with examples of a shakeout phase and ultimate coalescence around a dominant technology protocol. Interoperability relies on such a dominance of one — Ethereum — or a limited few such rival blockchain platforms," he says.
Lunde agrees Ethereum will dominate the landscape, highlighting the first mover advantage.
" ... despite the high transaction fees and the uncertainty involved with the ETH 2.0 transition, the most likely scenario is that Ethereum holds its dominance. Yet protocols such as Polkadot and Solana could also experience more growth, and their interoperability could also be beneficiary for Ethereum," he says.
On a different note, Urquhart thinks a blockchain other than Bitcoin and Ethereum will surface as the main platform.
Who's farming and who isn't (yet)?
With all this talk of DeFi and yield farming, we asked the experts if they've dabbled in it themselves, revealing half the panel have participated in yield farming to some extent. Around one in five panellists (18%) is an enthusiastic farmer, while a quarter say they've experimented but nothing more. The remainder of the panel (7%) say they have only a little bit. The other half haven't touched it and the majority of non-farmers plan to stay that way, while a small number (14%) are planning to give it a go.
Finder's panel is most positive on the outlook for Bitcoin (73%), followed by Etherum (67%) and Binance Coin (47%).
Hammoud says Bitcoin has proven to be the safest form of digital money to trade and hold due to the unique characteristics of scarcity and network security.
" … adoption coins like Litecoin [and] Bitcoin Cash will have a very hard time competing. Ethereum has proven to be the best platform for blockchain innovation due to the ease of use and the large community backing. It will be difficult for other blockchains to compete without major breakthroughs."
Dehry shares a similar sentiment, arguing cryptocurrency adoption is growing and regulation is becoming clearer.
" … But while some crypto assets such as Ethereum or Binance Coin have shown real ambitions in becoming an important actor in DeFi and in creating the future of finance, some others such as Litecoin have lost interest from retail investors."
The panel is most negative on Bitcoin Cash (55%), Litecoin (48%) and XRP (39%).
Raczynski predicts some coins will see their values increase sharply while others plummet.
"I firmly believe the crypto winter is over. And though spiking in both directions will persist, the trend for the marketplace is higher. The momentum is moving, and the crazy DeFi projects that will crash hard will be very cool experiments, with some turning into real financial products," he says.
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