Coin Bureau’s pseudonymous host believes Ethereum has the potential to surpass $ 20,000 with the help of an emerging sector of crypto markets.
In a new video, Guy’s popular analyst says Decentralized Finance (DeFi) and its ability to replicate the services of traditional finance without the drawbacks will be the catalyst pushing Ethereum into the stratosphere.
Guy tells his 1.13 million YouTube subscribers that traditional finance is “totally replaceable”.
“Unsurprisingly, banks have done pretty badly over the past decade. From US banks to those of China, Japan and Europe, a disastrous feat for what was once a pre-eminent industry. Just try to imagine: This is the sector that caused the 2008 financial crash. They have refined the craft of privatizing profits and socializing losses. Even so, they have still not succeeded in creating value for their shareholders …
So the question is: What services do these banks offer and can they be replicated in DeFi? “
To answer this question, Guy refers to an article written in April by Arthur Hayes, the former CEO of the derivatives exchange BitMEX.
In his essay, Hayes explains how DeFi can easily replicate savings accounts, checking accounts, and fiduciary services. However, he notes that while DeFi can offer credit, the sector is severely over-collateralized, which means that banks, despite their shortcomings, tend to do better with credit.
However, Hayes notes that if Ethereum could get a percentage of the five-year average profits from banks and the big four accounting firms, it would skyrocket in value.
Based on Hayes’ equations, if the Ethereum ecosystem managed to generate 0.5% of traditional finance revenues, it would add ten times the value of ETH to more than $ 20,000. Capturing 5% of traditional finance revenue would bring it to $ 200,000.
The Coin Bureau host claims it is a reasonable expectation for DeFi to generate 0.5% of traditional finance revenues.
“This knowledge is the reason that institutional investors are draining from it. That realization is why Goldman jumped into the [Ethereum] Options before offering them on Bitcoin. Of course, a lot depends on the upcoming updates. Driving such fundamental upgrades will be no easy task on a network valued at over $ 300 billion. But they are necessary. ”
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Featured image: Shutterstock / Kamenetskiy Konstantin