The last few months have been particularly favorable for the decentralized finance (DeFi) sector. Indeed, it has grown considerably and adapted to the expectations of those who wanted to invest in it. However, on the cryptocurrency side, all was not rosy. Indeed, not only bitcoin (BTC) has lost value, but in addition the predictions are not good.
A year that will be gloomy
Considering the actions of the US Federal Reserve (Fed) and other central banks, Huobi Research believes that BTC will enter a bear market that will last several months. The institution provides an entirely gloomy year for BTC. But when it comes to the decentralized finance (DeFi) sector, she remains positive and believes the field will continue to attract people.
Back to the cryptocurrency industry. Last Thursday, the prices of BTC and ETH tumbled. In the past 24 hours, BTC lost around 7.9% of its value to as low as $38,788 at the time of writing this article. This is part of the reason why experts at Huobi Research continue to believe that the year will be bleak for the king of cryptocurrencies.
DeFI and DAO will grow in 2022
To justify the outlook for bitcoin (BTC)’s falling value, Huobi Research considers an event that occurred in 2013 that is similar to the situation the market finds itself in now. In 2013, the Fed took a series of decisions that unfortunately plunged the cryptocurrency market into a downward momentum from which it only struggled to emerge.
Even though Huobi’s predictions are gloomy about BTC, the group believes that in a broad sense, the industry can see significant development in other sectors. For example, DeFi will strengthen attract investors. Moreover, this market has grown from $19 billion in January 2021 to a high of $250 billion in total value blocked at the end of the year. Huobi even predicts the arrival of version 2.0 of decentralized finance, DeFi 2.0.
Finally, the group believes that DAOs will become powerful mechanisms that influence state decisions. DAO fund management can be linked to various DeFi applications, enabling better cash management, according to Huobi Research.
The king of cryptocurrencies is currently in a downtrend that could have long-term consequences. Experts even predict a particularly sluggish year with a gradual loss of value. However, nothing is lost. Indeed, they also believe that the market will grow as a result of other things like DAO and DeFi.