It is already consensus inside the DeFi corner of crypto that DeFi assets should overtake the ranking positions of older, 2017/18 networks. This is already starting to happen.

But how are they going to get there, and how is DeFi going to grow, in BTC/ETH terms? Is it going to be straight up, with no meaningful rebalances between them?

We’ve seen a pretty steep fall of DeFi in September, and a rally on BTC and ETH in the following months. This started to unravel now.

My current hypothesis is that DeFi will grow in bubbly cycles. The current cycle will get out of hand, and copycats will start to pop with increasingly worse quality, circle-jerky schemes (like the rebase games) will spread faster, and yes, more bitcoiners will be drawn into it. Eventually, it pops.

The good thing is that this scenario ends with more people into DeFi than previously, and after some time it should pick up again — hard to say how long afterward, given we have only seen one of these.

Bitcoin and crypto are in a mega-cycle, maybe a multi-year cycle. DeFi will benefit from that, but the very nature of these products and the ability to create and copy new ones will make the market constantly overshoot the % DeFi should be during manias. A bubble, within a bubble

The trend is clearly up, but it will be a bumpy road.