This week in DeFi, a discussion surfaced about whether increased participation from Wall Street can trigger the first extended “supercycle” in the crypto market, projecting digital asset valuations to surpass the traditional four-year cycle.
As the premier smart contract blockchain, Ethereum’s native Ether (ETH) token might see benefits from “Wall Street engaging with the blockchain,” as stated by BitMine, the largest corporate ETH holder.
Despite this hopeful outlook, Ether’s price decreased by 13% in the past week, falling below the $4,000 mark for the first time since August 8, according to Cointelegraph data.
In the broader cryptocurrency ecosystem, the Hyperliquid (HYPE) token’s vesting schedule will release approximately $11.9 billion HYPE tokens over two years for the team, which may serve as the “first true test” of the token’s resilience, according to BitMEX co-founder Arthur Hayes’ family office fund, Maelstrom, announced on Monday.
This “Sword of Damocles” scenario will introduce monthly unlocks amounting to around $500 million, with only about 17% expected to be absorbed through buybacks, leaving a potential supply overhang of around $410 million, as per Maelstrom researcher Lukas Ruppert.
Whale wallet “0x316f” withdrew $122 million in HYPE tokens on Monday, shortly after Maelstrom warned about the impending sell pressure.
Ethereum bulls tout supercycle; Wall Street is skeptical
The cryptocurrency market may witness its first lengthy cycle due to an influx of institutional capital and trading products in the Web3 sector, enhancing accessibility to digital asset investments.
Some investors anticipate a crypto “supercycle” that could undermine the four-year crypto market cycle theory linked to the Bitcoin (BTC) halving, projecting valuation increases beyond this traditional time frame.
For Ether, the supercycle might be propelled by Wall Street’s growing embrace of blockchain technology, as noted by BitMine Immersion Technologies, the largest corporate holder of Ether.
The primary booster for Ether could be “Wall Street engaging with the blockchain,” according to BitMine.
Nevertheless, not all Wall Street participants share a bullish outlook on Ether’s price direction.
The US investment bank Citigroup has set a year-end price target of $4,300 for Ether, significantly lower than ETH’s all-time peak of $4,953 on August 24.
“Current prices exceed activity estimates, likely influenced by recent buying enthusiasm and excitement over use cases,” Citi noted in a Monday report seen by Reuters.
Ether has appreciated about 108% over the past six months and was trading at $4,177 at the time of writing, according to TradingView data.
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Circle explores “reversible” USDC transactions in break from crypto ethos
Circle, the world’s second-largest stablecoin issuer, is reportedly investigating reversible transactions to recover funds lost to fraud and hacks, seemingly contradicting one of crypto’s core principles: that transactions are final and beyond centralized influence.
Circle president Heath Tarbert told the Financial Times that the company is exploring mechanisms that might allow transactions to revert in cases of fraud, while still ensuring settlement finality.
“We are contemplating [. . .] the potential for transaction reversibility, but at the same time, we want to maintain settlement finality,” Tarbert said. “There’s an inherent tension between immediate transfers being irrevocable […].”
Clash with crypto ethos
Proponents of reversibility argue it may assist scam victims and enhance mainstream confidence in stablecoins. However, this idea challenges the decentralized model that defines crypto, where transactions are permanent and resistant to unilateral changes by issuers or validators.
Cointelegraph has reached out to Circle for additional information regarding the specifics of transaction reversibility and the criteria for initiating reversals.
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Vitalik calls for open-source infrastructure in health, finance, governance
Ethereum co-founder Vitalik Buterin advocated for open-source, verifiable infrastructure across crucial sectors, including healthcare, finance, and governance, cautioning that centralized systems could undermine trust and security.
In a Wednesday blog post, Buterin argued that reliance on closed, opaque systems increases the risk of abuse and monopolization as digital infrastructure becomes integral to daily life.
“The civilizations that benefitted most from new technological waves are those that produced the technology, not just consumed it,” Buterin noted, emphasizing that “openness and verifiability can combat global balkanization.”
He envisions a future where verifiable devices serve as the foundation for global systems. “If left unchecked, we are likely headed toward digital systems constructed and operated by centralized corporations,” he cautioned. “However, we can strive for a better path.”
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BlackRock raking in $260 million in annual revenue from Bitcoin, Ether ETFs
BlackRock’s cryptocurrency-based exchange-traded funds (ETFs) have become a major revenue source, generating $260 million for the world’s largest asset manager, indicating a “benchmark” model for traditional investment firms seeking profitable ventures.
BlackRock’s Bitcoin and Ether ETFs are bringing in $260 million annually, comprising $218 million from Bitcoin ETFs and $42 million from Ether products, according to data shared on Tuesday by Leon Waidmann, head of research at the nonprofit Onchain Foundation.
The success of BlackRock’s crypto-focused ETFs may encourage more investment giants from the traditional finance sector to launch regulated cryptocurrency-based trading products, with BlackRock’s ETFs serving as a “benchmark” for institutions and traditional pension funds, Waidmann stated.
“This has transcended experimentation. The world’s largest asset manager has demonstrated that crypto can be a significant profit center. That’s a quarter-billion-dollar operation established almost overnight. For context, numerous fintech unicorns take a decade to reach that level of profitability.”
Waidmann likened the ETFs to Amazon, which initially focused on books before expanding to various products, indicating the ETFs are an “entry point into the crypto space.”
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Aster leads perp DEX surge to $70 billion daily trading volume
Perpetual trading volumes on decentralized exchanges (DEXs) reached an unprecedented $70 billion on Thursday, largely driven by Aster, a new derivatives platform on BNB Chain.
Perpetual DEX volumes spiked to record highs over three consecutive days as decentralized perpetuals activity surged. On Tuesday, the total volume for perp DEXs was $52 billion, which rose to $67 billion on Wednesday.
The volume peaked at $70 billion on Thursday, demonstrating revitalized momentum within the decentralized finance (DeFi) derivatives sector.
Aster led the way with nearly $36 billion in 24-hour trading volume, accounting for over 50% of the total perp DEX action on Thursday. The platform surpassed competitors like Hyperliquid and Lighter, both registering volumes exceeding $10 billion.
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DeFi market overview
Based on data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization finished the week with gains.
The Story (IP) token experienced a decline of over 30%, marking the largest drop for the week among the top 100, followed by memecoin launchpad Pump.fun’s (PUMP) token, which fell over 29% in the weekly chart.
Thank you for reading our summary of this week’s most significant DeFi developments. Join us next Friday for further stories, insights, and education on this rapidly evolving sector.
