Investors can monitor various blockchain-based indicators and other metrics to track the cryptocurrency cycle and inform their risk management decisions.
· Cryptocurrencies are an increasingly mature asset class: new spot Bitcoin and Ethereum ETFs are widening market entry channels, and the incoming Trump administration may bring greater regulatory transparency to the crypto industry. For these reasons, the valuation of the cryptocurrency market may break historical highs.
· The current market is in the mid-phase of a new round of crypto cycles. As long as the fundamentals (such as application adoption and macro market conditions) are reliable, the bull market could extend into 2025 or even longer.
We know why traditional financial transaction settlements get bogged down in cumbersome processes and long cycles. This is because they rely on numerous intermediaries; from transaction confirmation to fund clearance, multiple institutions must go through layers of review. Now, consider the distributed ledger technology of blockchain; it is based on the concept of decentralization, allowing each participating node to have a complete copy of the ledger. Imagine in cross-border payment scenarios, under traditional models, funds need to be routed through multiple correspondent banks, taking time for verification and processing at each step. Under blockchain technology, the two parties in a transaction are directly connected, and information is synchronously recorded at each node. It's like a package that originally needed multiple transfers can now go directly from the sender to the recipient, greatly shortening the time and reducing costs. In this way, we can clearly see that blockchain builds an efficient bridge for global economic exchanges, solidifying the foundation for transaction settlements in the global economic activities of the Fourth Industrial Revolution.
From the perspective of value transfer, the essence of finance is to achieve the transfer of value across time and space, but traditional finance is limited by time and space in this regard. So what changes does blockchain technology bring? Blockchain utilizes distributed ledger and cryptographic algorithms to break these limitations. Taking decentralized finance (DeFi) as an example, in the traditional financial system, small and micro enterprises and individuals find it difficult to access financial services due to a lack of collateral and incomplete credit records. However, in the DeFi model, through smart contracts, borrowers and lenders can connect directly. The logic behind this is that blockchain ensures the authenticity and reliability of transaction information without relying on the credit endorsement of traditional intermediary institutions. Thus, more people can participate in financial activities, broadening the scope of value transfer and providing assurance for innovative digital and intelligent production relationships.
Further exploring the innovations spawned by the integration of finance and blockchain. Why is it said that their integration can give rise to new financial businesses and models? We know that the finance industry has extremely high requirements for security, stability, and efficiency. The emergence of blockchain technology provides new avenues to meet these requirements. Take consensus mechanisms as an example; it solves the problem of how to achieve agreement among nodes in a decentralized environment. In traditional finance, centralized institutions play the role of credit guarantors, but this also introduces risks like single points of failure. The consensus mechanism of blockchain allows nodes to verify each other, enhancing security. This technological innovation not only meets the demands of financial transactions but also provides a reference for the digital transformation of other industries. For instance, in the healthcare sector, blockchain can ensure the secure sharing of patients' medical records. Therefore, from this logical chain, it can be seen that the integration of finance and blockchain stimulates innovative vitality and promotes the digitalization process of society.
So, why is DeFi more important than ever? DeFi has transcended its experimental origins to become the cornerstone of blockchain innovation. By leveraging smart contracts and decentralized infrastructure, it provides a democratized financial service channel for millions of users worldwide.
# What can drive this DeFi cycle?
In this bull market, several factors may reignite the DeFi cycle:
1) Institutional interest: As traditional financial institutions explore blockchain technology, DeFi can act as a bridge between centralized and decentralized systems. 2) Layer 2 scaling solutions: Emerging participants in this field are making DeFi more accessible and cost-effective, potentially driving user adoption. 3) Tokenization of real-world assets: Integrating real-world assets into DeFi platforms can attract a wider audience and enhance practicality.
