Many crypto investors who currently hold stablecoins are preparing to enter the market, according to a senior executive at the tech firm building the smart contract platform Avalanche (AVAX).
Ava Labs President John Wu in a new interview with Bloomberg Say Despite the sharp drop in market capitalization over the past year, the fundamentals of the cryptocurrency industry are getting stronger.
He expects stablecoin holders to reinvest to earn substantial profits in the future.
“What the market needs to understand is that there will be alpha in the crypto asset space. And for good reason.
The fundamentals are definitely increasing and improving. [As for] Technically, if you consider the market cap of cryptocurrencies, they have declined, but stablecoins have not.
This tells you a lot of people are just hiding out there ready to deploy. “
Alpha is when an investor earns more than the average return on an asset.
Talking about Ethereum and its imminent transition to a proof-of-stake (PoS) consensus mechanism, Wu said the merger will result whether or not ETH and Bitcoin (BTC) risk correlation with Nasdaq declines from the current level of 0.75 alpha profit.
“It’s a huge catalyst. I think it’s surprising to people that the 0.75 correlation is going down no matter where the market goes.
You will have some alpha in this area. “
In statistics, a correlation coefficient of 1 indicates a perfect linear relationship.
The tech executive concluded by discussing the end of the bear market and what’s next for the crypto space.
“I personally think this winter will last longer, but what I’m really looking forward to are these new applications, these new protocols that will redefine the way businesses operate and build.
When tokenization is in full swing, what you can do is code the business logic into smart contracts, and the platform is the business. “
Wu went on to give an example of how the employees of the decentralized exchange Uniswap (UNI) were able to calculate more daily trading volume than the larger centralized exchange Coinbase.
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