The crypto market may grow as a result of predictions made last week by Wall Street financial firm Bernstein. Bernstein, an investment firm, outlines its plans, beginning with the Ethereum blockchain’s Merge.
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Successful completion of the Ethereum Merge
There remains a healthy amount of doubt even though the transition from a proof-of-work approach to network maintenance to a proof-of-stake one is just days away, based on a note last week by Bernstein analysts Gautam Chhugani and Manas Agrawal.
They predict it will occur between September 10 and September 20 and that it will be a catalyst for cryptocurrency.
The next wave of crypto user demand will be fueled by rollups.
As per Chhugani and Agrawal, the number of users, on-chain liquidity, and transactions on rollups like Optimism and Arbitrum have all increased significantly, with roll-up transactions now contributing to 15% to 25% of all transactions on the Ethereum blockchain.
Rollups are Ethereum layer 2 platforms that support in processing transactions apart from the main network to quicken processing and cut costs.
Ether overtakes Bitcoin as the leading cryptocurrency.
The most common query from investors is when the market capitalization of ether (ETH) will surpass that of bitcoin (BTC), according to the note. What is really essential for digital assets is that they develop into “an innovation-driven, structural trend rather than a macroeconomic asset class.”
Ether stands for this “innovation-crypto,” and the team suggested that ETH might become the standard for digital currency if it is successful in creating the blockchain digital economy.
The DeFi summer returns with DeFi on rollups.
The first “DeFi summer” was in the summer of 2020, but since then, according to the analysts, layer 1 chains have outperformed the decentralized-finance sector. The Uniswap exchange currently receives roughly 10% of its fees from rollups, according to the Bernstein analysts, who noted that Layer 2 scalability has made DeFi once again inexpensive.
NFTs switch to gaming, changing play-to-earn into play-to-own.
Crypto games will have a specific culture of their own, the Bernstein team predicted. Chhugani and Agrawal predict that “over a million NFT (non-fungible token) avatars will become playable characters across various compatible crypto games” as a result of a major talent shift from traditional gaming studios to Web3 games development.
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Token economic designs begin to prioritise value creation
In contrast to the newest fast blockchain or retail meme coins, “more sustainable token designs will restore retail enthusiasm in investing in application tokens,” the experts wrote.
The fat application thesis replaces the fat protocol thesis.
According to the “fat protocol thesis,” blockchain value would build up at the basic protocol layer rather than the application layer.
The “long-tail of application tokens,” according to Bernstein, will increase as a result of higher scalability, low transaction costs, faster user growth on rollups, improved token value accrual, and retail enthusiasm for investing in applications that they already use.