If you can’t Beat them, Join them - SUNDAY THOUGHTS
Dear DEFI TIMES community,
Prices dumped this week; however, they recovered faster than many people expected! There were a few reasons for this and today, I would like to cover some of them: it seems that traditional banks want to use blockchain technologies to improve their businesses.
In addition to that, cryptocurrencies have become more and more relevant in the broader society. In today's SUNDAY THOUGHTS episode, I will show how the crypto sector's appearance has changed and why we are at the beginning of a parabolic bullrun!
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First of all, let’s have a quick recap of the week. We started relatively calm into the week but this changed quickly. In the recent G7 meeting, Mnuchin announced that the G7 states want to regulate cryptocurrencies even more. Stablecoins are in danger of over-regulation. Nevertheless, elementary developments occurred this week - some were eye-catching; some were overlooked.
Therefore, it is essential to classify all the different events to get a better view of the situation. Firstly, different financial institutions took the next step to use blockchain technologies successfully.
On the one hand, BBVA and DBS, two banks from Spain and Singapore, announced that they will offer platforms to trade cryptocurrencies and digital assets in many different forms. Also, we all heard about J.P. Morgan and how they secretly dealt with Bitcoin after criticizing it.
And there was Stuttgarter Börse that exceeded their goals with the Bison app by far! The Bison app offers a user-friendly platform for newcomers to purchase cryptocurrencies. This week they reached a year-to-date trading volume of one billion euros, which is phenomenal for a German crypto-app.
Institutions joining DeFi?
On top of that, MicroStrategy announced they wanted to invest more money into Bitcoin - another $400 Million, to be precise!
All in all: large institutions, especially financial institutions, are joining the crypto sector!
These institutions are looking for opportunities in Bitcoin, Ethereum, and maybe XRP, but they don't really care about DeFi.
One reason might be that it is not easy to interact with smart contracts as an institution. Could you imagine how an institution uses a MetaMask wallet and decentralized applications, such as Uniswap? Not really!
Well, this might change very soon! ConsenSys announced that they will publish an institutional version of MetaMask. Large institutions will have access to an unexplored part of the crypto sector very soon - Decentralized Finance! Today, $14 Billion is locked in DeFi, which is a ridiculous amount of money, considering that the entire financial system could be decentralized one day.
Now, imagine what could happen when billions and trillions of Dollars go into different DeFi projects - a parabolic bullrun!
This sounds too good to be true? Well, we haven't spoken about Ray Dalio yet! Ray Dalio used to criticize Bitcoin - this week, he said that Bitcoin and Co. established themselves as gold alternatives.
Honestly, I could not believe that Ray Dalio changed his mind somehow. Ray Dalio is a 71-year-old multi-billion Dollar hedge fund manager with an enormous impact on the market. However, Ray Dalio was not the first one who changed his mind about Bitcoin. Michael Saylor, Co-Founder, and CEO of MicroStrategy, compared Bitcoin with an online casino in 2013. Today, he is super bullish on Bitcoin. This is why his company invested $475 Million in Bitcoin so far and is willing to invest another $400 Million.
Let us realize how severe the past years of the bear market have been! Many influential people called Bitcoin and Co. a scam, cryptocurrencies were forbidden in many countries, and large parts of the society laughed about this "internet money". Within a few months, this has entirely changed. Even though some influential newspapers claimed that Bitcoin "failed the Corona test", Bitcoin and Co. established themselves as a good store of value. This is because no financial institution can afford to ignore the development of cryptography and blockchain technologies. While central banks print money regularly, the savings of millions and billions of people get devalued - and this has happened for years already! The Corona pandemic revealed the central financial system's grievances; even institutions like MicroStrategy are looking for alternatives. In short: the central financial system is about to collapse!
If more and more people choose the new form of money, something incredible will happen: hard money, in the form of cryptocurrencies, will make banks obsolete.
If banks continue to believe that Bitcoin and Co. are a scam they will disappear forever. Nevertheless, there is a chance of survival for a few of them: if they start to use blockchain technologies and offer their customers crypto products, these banks have at least a chance to survive!
The institutions, we talked about today, are definitely realizing this fact.
"If you can't beat them, join them!"
All in all, prices have recovered very well today! This might not last long, but please remember to look back and realize how incredible this year was! Just think about how DeFi developed from a small niche to a sector that could threaten the whole central financial system.
Avoid short term thinking, stay calm, fill your bags, and enjoy yourself! We will head to the moon very soon!
All information presented above is meant for informational purposes only and should not be treated as financial, legal, or tax advice. This article's content solely reflects the opinion of the writer, who is not a financial advisor.
Do your own research before you purchase cryptocurrencies. Any cryptocurrency can go down in value. Holding cryptocurrencies is risky.