DeFi Craze Possibly Responsible for New Crypto Market Entrants

The cryptocurrency space sees new entrants almost every year, as digital assets continue to attract different classes of people. However, a new Twitter poll gives insights into what might be causing this recent influx of investors.

Analyzing Possible Timeframes

The poll, which was conducted by Twitter user CoinMamba, surfaced on September 11, 2020. The user had asked respondents for how long they had been involved in the crypto space, and 42.9 percent of the total 1,995 votes confirmed that they had been in the space for over three years.

The poll showed that most users had been in the industry since Bitcoin’s inception to its 2017 run. There’s a high probability that many of these investors entered during the bull run. At the time, many had tried to get into Bitcoin as a get-rich-quick scheme.

Coming in second was the slot for “1-3 years,” which had 33.5 percent of respondents. Most of these investors have become familiar with the period just after the boom, including the crypto winter of 2018 and Bitcoin’s arduous journey back into profitability.

14.2 percent of respondents claimed that they’ve been in the market for less than a year. These investors have primarily been around for good times, as Bitcoin had managed to stay above water in the past year — save for mid-March, when the asset took a significant nosedive along with other asset classes due to the coronavirus pandemic. However, given that every market felt the virus’ effects, this isn’t surprising.

A surprising 9.4 percent claimed that they had joined in the past three months — a period where Bitcoin has continued to surge, although that momentum appears to have been waning for the past week or two.

DeFi is Going Nuclear

While it’s not the only trend, it is safe to say that most of these people who make up the last 9.4 percent have grown an affinity for decentralized finance (DeFi). The DeFi space has seen significant growth this year alone, with the total assets locked now totaling $8.51 billion, according to data from DeFi Pulse.

DeFi has given investors a new way of growing their wealth and transacting with each other. Like many concepts in the crypto space, it has drawn significant interest from many. However, its speed and growth rate have been unlike anything the industry has ever seen as well.

DeFi has also gotten a lot of interest from traditional crypto space players. Dan Moorehead, the chief executive and founder of investment firm Pantera Capital, recently told reporters that the DeFi space would outperform Bitcoin in the next half-decade. 

However, not everyone is buying into the DeFi craze. On September 10, Ryan Selkis, the founder of data aggregation platform Messari compared the DeFi craze to the the Initial Coin Offering (ICO) boom in 2018. He explained on Twitter that the DeFi space is seeing an influx of investors similar to the Initial Coin Offering (ICO) surge. He further predicted that, like the ICO sub-industry, the DeFi space would soon run out of gas.

“ICOs boomed for a while because everyone (laughably) thought there would be a coordinating utility token for every industry. DeFi is just one big pool of capital sloshing around a small group of insiders and mercenaries who will soon run out of victims to fleece,” Selkis said in a follow-up tweet.

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