This week in DeFi, a discussion arose regarding the potential for increased adoption by Wall Street participants to trigger the crypto market’s inaugural prolonged “supercycle,” which could see digital asset valuations exceeding the typical four-year cycle timeframe.
As the foremost smart contract blockchain, Ethereum’s native Ether (ETH) token may stand to gain from “Wall Street venturing into the blockchain,” as indicated by BitMine, the largest corporate holder of ETH.
Despite this positive outlook, Ether’s price took a 13% dip over the week, falling below the $4,000 mark for the first time since August 8, according to Cointelegraph data.
In the broader cryptocurrency landscape, the Hyperliquid (HYPE) token’s vesting plan will roll out approximately $11.9 billion HYPE tokens over two years for the project team, which might pose the “first real challenge” to the token’s stability, as noted by Arthur Hayes’ family office fund Maelstrom, on Monday.
This “Sword of Damocles” moment will unleash around $500 million in monthly unlocks, with only about 17% expected to be countered by buybacks, leaving roughly $410 million in potential excess supply, according to researcher Lukas Ruppert from Maelstrom.
Whale wallet “0x316f” withdrew $122 million in HYPE tokens on Monday, shortly after Maelstrom highlighted the impending sell pressure.
Ethereum bulls promote supercycle; Wall Street remains cautious
The cryptocurrency market might see its first extended cycle fueled by greater institutional investment and trading products in the Web3 sector, thus making digital asset investments more accessible.
Some investors are anticipating a crypto “supercycle” that could challenge the notion of the four-year crypto market cycle linked to the Bitcoin (BTC) halving, potentially leading to increased digital asset valuations beyond this historical timeframe.
For Ether, the anticipated supercycle may gain momentum through Wall Street’s increasing involvement with blockchain technology, according to BitMine Immersion Technologies, the largest corporate holder of Ether.
One significant factor for Ether could be “Wall Street venturing into the blockchain,” suggests BitMine.
However, despite the hopeful talk surrounding a supercycle, not all Wall Street figures are optimistic about Ether’s price trajectory.
US investment bank Citigroup has set a price target of $4,300 for Ether by year-end, substantially lower than ETH’s peak of $4,953 on August 24.
“Current prices exceed activity estimates, potentially influenced by recent buying momentum and excitement over use cases,” Citi noted in a Monday report seen by Reuters.
Ether has experienced a roughly 108% increase in the last six months and was trading at $4,177 at the time of this writing, as per TradingView data.
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Circle investigates “reversible” USDC transactions, diverging from crypto principles
Circle, the second-largest stablecoin issuer, is reportedly looking into reversible transactions to recover funds lost to fraud and hacks, contradicting one of crypto’s core tenets: that transactions are final and immune to centralized oversight.
Circle president Heath Tarbert informed the Financial Times on Thursday that the firm is exploring mechanisms that might allow transactions to be undone in instances of fraud or hacks, while still ensuring settlement finality.
“We are considering […} the possibility of transaction reversibility, but at the same time, we aim for settlement finality,” Tarbert told the FT. “Thus, there’s an inherent conflict between enabling immediate transfers and having them be irrevocable […].”
Conflict with crypto principles
Proponents of reversibility contend it could assist scam victims and bolster mainstream confidence in stablecoins. Nonetheless, this concept challenges the decentralized framework that supports crypto, where transactions are permanent and resistant to unilateral amendments by issuers or validators.
Cointelegraph has reached out to Circle for comments on transaction reversibility specifics and the criteria that would govern potential reversals.
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Vitalik advocates for open-source infrastructure in critical sectors
Ethereum co-founder Vitalik Buterin called for an open-source, verifiable infrastructure across essential fields, including healthcare, finance, and governance, cautioning that centralized systems risk undermining trust and security.
In a Wednesday blog post, Buterin argued that as digital infrastructure permeates daily life, reliance on closed and obscure systems raises the risk of exploitation and monopolization.
“The societies that have benefited most from technological advancements are not those that merely utilized the technology, but those that created it,” Buterin stated, adding that “openness and verifiability can combat global fragmentation.”
Buterin envisions a future where verifiable devices form the foundation of global systems. “By default, we are likely to see digital technologies designed and managed by centralized companies,” he cautioned. “However, we can strive toward a more favorable alternative.”
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BlackRock generates $260 million annually from Bitcoin and Ether ETFs
BlackRock’s cryptocurrency-driven exchange-traded funds (ETFs) have turned into a significant revenue source, producing $260 million for the world’s largest asset manager, signaling a “benchmark” model for traditional funds looking for lucrative opportunities.
BlackRock’s Bitcoin and Ether ETFs are generating an annualized revenue of $260 million, with $218 million stemming from Bitcoin ETFs and $42 million from Ether products, as per Tuesday’s data shared by Leon Waidmann, head of research at the nonprofit Onchain Foundation.
The profitability of BlackRock’s crypto-focused ETFs may encourage additional investment giants in traditional finance (TradFi) to create regulated cryptocurrency trading products, with BlackRock’s crypto ETFs serving as a “model” for institutions and traditional pension funds, Waidmann commented.
“This is no longer an experiment. The world’s largest asset manager has demonstrated that crypto is a solid profit center. That’s a quarter-billion-dollar enterprise, established almost instantaneously. For context, many fintech unicorns don’t achieve that in ten years.”
Waidmann likened the ETFs to Amazon, which began with books before expanding to everything. He noted that the ETFs are the “gateway into the crypto realm.”
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Aster propels DEX volumes to $70 billion daily
Perpetual trading on decentralized exchanges (DEXs) soared to an all-time record of $70 billion on Thursday, largely propelled by Aster, a new derivatives platform on BNB Chain.
Perpetual DEXs set record volumes for three consecutive days, with overall volumes reaching $52 billion on Tuesday, followed by $67 billion on Wednesday.
The volume reached $70 billion on Thursday, reflecting renewed activity in the decentralized finance (DeFi) derivatives market.
Aster led the charge with nearly $36 billion in 24-hour trading volume, accounting for over 50% of the total perpetual DEX activity on Thursday. Rivals like Hyperliquid and Lighter followed closely with volumes exceeding $10 billion each.
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DeFi market snapshot
As per data from Cointelegraph Markets Pro and TradingView, most of the top 100 cryptocurrencies by market cap closed the week in the green.
The Story (IP) token saw a decline of over 30%, marking the week’s largest drop among the top 100, followed by memecoin launchpad Pump.fun’s (PUMP) token, which dropped over 29% on the weekly chart.
Thank you for reading our summary of the most significant DeFi developments this week. Join us next Friday for more stories, insights, and education about this rapidly evolving space.
