Bitcoin is almost hitting its all-time high (ATH) with the price hovering around $19,400 according to Coingecko metrics as of press time. This pioneer digital asset is becoming more mainstream to both retail and institutional investors, having survived critics over the past decade. In fact, there is more consensus that Bitcoin might after all be the ‘digital gold’ and could ultimately replace gold as a safe haven in hedging against macro uncertainties like inflation and unfavorable monetary policies.
This narrative is now a hot topic of discussion even in Wall Street where some companies have already allocated a significant part of their treasuries to BTC. Last week alone, Grayscale which runs the leading Crypto Trust added 7,300 BTC to its portfolio and now manages around $10 billion worth of crypto assets. Well, stakeholders who include a Bloomberg Intelligence team led by analyst Mike McGlone, recently noted a divergence in BTC and Gold ‘futures and fund flows’ to favor the former.
“Is #Bitcoin Replacing #Gold? #Futures and Fund Flows Are Saying Yes — Rising futures open interest and investor inflows in Bitcoin vs. the same declining for gold indicate the #cryptocurrency gaining an edge for price appreciation, in our view”
A Possible Comeback of the Summer DeFi Craze?
As BTC climbs to glory, other crypto niches like DeFi are also getting traction from the mainstream buyers looking to make a debut into this investment space. DeFi made headlines over this summer as affiliated coins rallied by thousands in percentage, although the hype died down after September.
It now appears that this set of tokens might be ready for take-off again to rally alongside the ‘king’ in the much anticipated BTC bull-run. Currently, the total locked value (TVL) in DeFi stands at $14.6 billion while its market capitalization is almost hitting the $19 billion mark.
Notably, there are still yield farming incentives for stakers on decentralized exchanges (DEXes) like Uniswap and Sushiswap who provide liquidity for governance tokens to thrive past initial stages. One such DeFi innovation is an Automated Market Maker (AMM) protocol dubbed ‘OnigiriSwap’.
Yield Farming Still On
This approach to incentivize participation picked up with the emergence of DeFi, hence yield farms for liquidity provision. Basically, they offer an avenue where participants can yield more returns from staking their tokens compared to the real world interest rates by financial institutions. In the summer, some farms had an APY as fertile as 10,000% for staking in their liquidity pools.
While such levels of APY have been phased out, there are still opportunities to yield from active farms like OnigiriSwap which offers ETH, DAI and USDC staking pairs. Farmers in this protocol harvest the $ONIGIRI governance token as staking rewards; some of the OnigiriSwap pools have APY’s that are over 1,500% which ideally beats most markets that have existed.
Like most DeFi protocols, OnigiriSwap is built on the Ethereum blockchain and relies on its governance token $ONIGIRI to achieve full decentralization. This token carries along some perks which include voting rights and rewards based on transaction fees within the network. It can also be traded on the Uniswap DEX where the price of one token stands at $0.00362 at the moment.
To preserve the value of its governance token, OnigiriSwap has implemented a deflationary tokenomics model. This protocol is designed to reduce the block rewards by half after every 100,000 blocks; early stakers are therefore exposed to more $ONIGIRI rewards. At block 1,200,000 the OnigiriSwap community will vote on whether to halt minting new coins as part of the value preservation strategy.
The bullion market has long been an inflation hedge, especially for high net worth individuals since back in the 70’s when the gold standard was abolished. While gold still carries the title given a $10 trillion market cap, its value proposition as an inflation hedge compared to an emerging asset like Bitcoin is in greater question. For starters, Bitcoin’s finite supply which is capped at 21 million coins is proving more attractive from a demand-supply perspective.
Gemini co-founders, the Winklevoss brothers, recently said in a CNBC interview that they are bullish of a $500,000 BTC price, should it scale to the heights of disrupting gold:
Our thesis is that bitcoin is gold 2.0, that it will disrupt gold, and if it does that, it has to have a market cap of 9 trillion, so we think it could price one day at $500,000 of bitcoin
Finally, is the COVID-19 factor which accelerated the shift to virtual ecosystems with payments at the forefront. This shift has made more people realize the value of decentralized ecosystems that underpin cryptocurrencies like Bitcoin and Ethereum. Unsurprisingly, the crypto market cap is almost hitting $600 billion after stagnating below $420 billion before the pandemic.