A senior executive at the tech company that builds the Avalanche smart contract platform (AVAX) thinks many crypto investors who currently hold stablecoins are gearing up to buy into the markets.
In a new interview with Bloomberg, Ava Labs President John Wu said that the underlying fundamentals of the crypto industry are strengthening despite a sharp decline in market capitalization over the past year.
He expects stablecoin holders to reinvest to reap significant profits in the future.
“What the market needs to understand is that there will be alpha in the crypto asset space. There are very good reasons for this.
The fundamentals are rising and absolutely improving. [As for] the technicals, if you think about the crypto market caps, they’ve gone down, but the stablecoins haven’t.
That tells you that a lot of people are hiding in there, ready to roll out.
Alpha refers to when investors earn more than an asset’s average return.
Regarding Ethereum and its upcoming transition to a proof-of-stake (PoS) consensus mechanism, Wu says the merger will generate alpha profits, that the risk correlation of ETH and Bitcoin (BTC) against the Nasdaq falls from its current level of 0.75. .
“It’s a huge catalyst. I think what will surprise people is that the correlation of 0.75, no matter where the market goes, will go down.
You’re going to have some alpha in the space.
In statistics, a correlation coefficient of one indicates a perfect linear relationship.
The tech executive concludes by discussing the end of the bear market and what’s next for the crypto space.
“Personally, I think winter will be here for a little longer, but what I’m really looking forward to are these new applications, these new protocols that are literally redefining the way businesses operate and will be built.
What you can do when tokenization is in full swing is you’re going to code the business logic into a smart contract, and then the platform is the business.
Wu then cites the example of how employees of the decentralized exchange Uniswap (UNI) are able to account for far more daily volume per person than the largest centralized exchange Coinbase.
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