DeFi Is Bitcoin Pre-2013 and Ethereum Pre-2015, Says Qiao Wang

September 13, 2020

Qiao Wang, former head of product of crypto analytics firm Messari, says decentralized finance (DeFi) reminds him of Bitcoin (BTC) and Ethereum (ETH) before the two largest cryptocurrencies skyrocketed.

In a tweet, Wang compares DeFi to the early days of Bitcoin and Ethereum.

“From an investment point of view, BTC pre-2013 and ETH pre-2015 were once-in-a-lifetime asymmetric bets. DeFi pre-2021 is once-in-a-decade IMO (until proven wrong). If you’ve missed the first two, don’t miss the latter.”

Although Wang is long-term bullish on the nascent sector, he warns his crew of 30,000 that there are bad actors preying on investors in the space.

“There was a lot of crap over the past two months but don’t get distracted by these. Try a dozen of real products and you’ll get a better sense of how DeFi enables fundamentally new and interesting user behaviors.”

Wang’s comments come as Bitcoin succumbed to profit-taking last week. The correction in the broader crypto market coincided with the pullbacks in gold and stock markets. The correlation between BTC and US equities has a simple explanation, Wang says.

“My best guess as to why BTC is short-term correlated with stocks is that a reasonably-sized traditional institution did a backtest off of 2 months (March and April 2020) worth of data and decided to trade the correlation, creating a self-fulfilling prophecy.”

Wang also believes that the positive correlation in shorter time frames indicates that it relates to high-frequency algorithmic trading rather than due to the macro environment.

Why not prevalent market sentiment or dollar supply/demand of the dollar, you ask? Well look at the high-frequency data. The correlation is strong at a very high frequency / short time frame. It’s more likely algo than discretionary trading.”

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