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Wall Street Veteran: Crypto Here to Stay, But Forget the 2017 Frenzy

Last Updated February 27, 2024 3:12 PM
Teuta Franjkovic
Last Updated February 27, 2024 3:12 PM

Key Takeaways

  • Di Bartolomeo says to expect less hype and more calculated investment than past rallies.
  • As regulations increase, lending activity migrates from DeFi to regulated entities.
  • Investors hold onto their crypto, boosting demand for Ethereum-backed loans.

In an exclusive interview with CCN, Mauricio Di Bartolomeo, Co-Founder of the cryptocurrency lending platform Ledn, shares his insights on the evolving landscape of cryptocurrency investment and the potential impact of an Ethereum ETF on institutional investment.

As the crypto market matures, the introduction of Ethereum-backed loans signifies a pivotal shift in how digital assets are perceived and utilized in the financial sector.

Diving Deep on Institutional Crypto, Ethereum Lending, and More

Di Bartolomeo delves into the nuances of institutional investment behavior, contrasting the speculative fervor of past rallies with the current, more calculated approach by seasoned investors.

Furthermore, he discusses the implications of Ethereum’s unique ecosystem on lending practices, highlighting the transition from decentralized to regulated platforms in response to compliance and regulatory demands.

CCN: How do you anticipate an Ethereum ETF will alter the landscape for institutional investment in cryptocurrencies?

Di Bartolomeo: “I think an Ethereum ETF will further legitimize the staying power of digital assets on Wall Street. However, I don’t think that it will lead to the speculative frenzy in other tokens that we saw in the 2017-2018 rally, or even in the 2020-2021 rally.”

“For a very clear reason – the persona of people buying digital assets, and their investment goals, are very different this time around. This time around, it’s people with an investment persona that’s more akin to Michael Saylor, Larry Fink, even Paul Tudor Jones. These are real institutional money, with real concerns over the debasement of the U.S. dollar and what that means for their portfolio.”

ETH Lending Moves From DeFi Platforms to Regulated Entities

CCN: In light of Ledn’s announcement regarding Ethereum-backed loans, could you elaborate on how Ethereum’s growing ecosystem might influence lending practices?

Di Bartolomeo: “Ethereum is unique to Bitcoin in that it has native decentralized lending offerings. However, given that the majority of the lending activity around ETFs will be carried out by regulated entities, these decentralized platforms are “off limits” to regulated counterparties. So, we believe a lot of the lending activity that used to take place in decentralized platforms will be migrating to centralized entities that can follow compliance and regulatory frameworks.”

CCN: With Ethereum’s gas fees reaching an eight-month high, primarily due to the ERC-404 token interest, what implications do you foresee for transaction costs and network scalability?

Di Bartolomeo: “I don’t think this will be a major headwind for Ethereum, in the same way that volatile fees have not been an impediment to Bitcoin’s growth. For the institutional investor buying a million dollars worth of Bitcoin or Ethereum, paying $50 for a transaction is peanuts. For the retail user, there are layer 2 solutions like Lightning or Optimism.”

CCN: The proposed DN-404 standard suggests a reduction in gas costs. How significant is this development for Ethereum’s broader adoption and efficiency?

Di Bartolomeo: “This solution is more geared towards incentivizing more activity happening at the base-layer level vs pushing it out to Layer 2 solutions. However, I don’t think it will have a material impact on institutional Bitcoin adoption or investment.”

ETH Price Surge Boosts Demand for Loans as Investors Hold Onto Crypto

CCN: Ethereum’s price has seen remarkable movement since January 25. How does market volatility affect the demand for Ethereum-backed loans?

Di Bartolomeo: “It validates the concept of not selling your Ethereum as it can appreciate in the future. In other words, it makes the demand for Ethereum-backed loans soar.”

CCN: Can you discuss the potential for new investment and liquidity opportunities arising from an Ethereum ETF and the broader impact on the crypto market?

Di Bartolomeo: “Lending your ETH to earn interest will create a very compelling alternative to staking. I believe this could take away market share from staking protocols and make Ethereum lending markets more dynamic.”

CCN: Lastly, with Ethereum nearing its previous price peak, how do you view the future of Ethereum in terms of price stability and market growth?

Di Bartolomeo: “I believe that the approval of Bitcoin and Ethereum ETFs will lead to higher all-time highs in both assets. This could happen sometime around mid-summer for Bitcoin and within 6 months of the first Ethereum ETF approval.”

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