William Kaye, co-founder of asset management firm Wilshire Phoenix, has argued that Bitcoin (BTC) may not be the future of the crypto industry.
Instead, investors should pay more attention to the wave of new developers, rather than the market capitalization of BTC, in order to spot the most promising projects, he says.
Speaking to BeInCrypto, Kay said that while bitcoin continues to be the industry standard, it will not be the driving force for the entire space as many projects begin to scale on their own.
He cited developments in Decentralized Finance (DeFi) and in Web3, the new Internet of the future built on the blockchain technology’s idea of decentralization, as examples of this difference.
Explained Kay, who believes that blockchains such as Solana (SOL) and Ethereum (ETH) (ETH) are already beginning to build a more solid infrastructure base for the Web3 economy than Bitcoin.
“Similar to the stock market, looking at the current market value of a stock by itself does not reveal much of its future potential. One has to look at other metrics that can be predictive or leading indicators.”
Developer activity key
One of the easiest ways to spot emerging major platforms is to monitor developer activity, Kay said.
“For the crypto space as a whole, one of the interesting metrics is the movement or growth of the number of employees or the amount of tokens. This metric can help reveal where the interest or recent growth is, especially in a very noisy and volatile token price environment.”
According to a report by Santiment, the top 20 projects by aggregate development activity for 2021 include blockchains such as Cardano, Kusama, Polkadot, and Ethereum.
The developers’ interest in Solana was demonstrated by attendance at blockchain hackathon events, where the number of participants rose to 13,000 last year from just 1,000 the year before.
Wilshire Phoenix focus on launching new investment products
Wilshire Phoenix is a New York-based company that describes itself as a “startup fund sponsor focused on launching new investment products to provide investors with direct and efficient access to the markets.”
The group had previously requested approval for a Bitcoin Trading Fund (ETF) which was rejected by the US Securities Commission (SEC) in March 2020. The ETF proposed to hedge Bitcoin against US Treasuries.
The idea was that an exchange-traded fund would help individual investors gain exposure to bitcoin at a low cost.
William Kay spoke as the cryptocurrency markets crashed, with the total market capitalization down more than 20% to $1.36 trillion from $1.7 trillion in the past 48 hours, according to Coinmarketcap.
The number is down 55% from an all-time high of $3 trillion on November 3.
Bitcoin accounts for 43%, or $589 billion, of the total market capitalization. The crypto-asset is down more than 25% to around $30,400 after the US Federal Reserve raised interest rates last week to curb inflation.
Terra’s LUNA led the way, dropping more than 80% to $4.25 at the time of writing, as the ecosystem’s stablecoin, UST, lost its peg to the dollar, dropping to $0.34.
Many people think this may be the end of LUNA and UST. Ethereum is down more than 23% at $2,300.
“In the immediate future, we see Bitcoin price continue to be an important barometer of the overall crypto space — price volatility will remain, but with upward growth potential,” Kay predicted.
Move carefully, Kai warns
Kaye, co-founder and managing partner of Wilshire, cautioned that while it is important to monitor developer activity, some market booms are deceptive and should be approached with caution.
“One has to be careful that explosive growth areas can produce massive winners, but also many other areas that will go to zero,” he said.
His comment highlights emerging developments in Terra [LUNA], the crypto giant that once bragged about a $40 billion net worth. That value has dropped dramatically since May 9, to just about $3.1 billion.
Kay said Bitcoin needs improvement in several areas. In November, Bitcoin Core saw its first major upgrade since 2017, which aims to make transactions cheaper, faster, more private, and more efficient.
But analysts criticized the Bitcoin Taproot upgrade as “a slight improvement on an already outdated technology.” It’s commonplace to monetize the best blockchain and crypto, which is routinely criticized for being too slow, or too rigid, to change at a time when competitors are making major changes and improvements to their blockchain.
Commenting on Wilshire Phoenix’s proposal for a Bitcoin ETF, Kaye asserted that the idea of such a product would greatly improve the cryptocurrency. Refused to surrender.
“We firmly believe that the market deserves a better bitcoin product than what is currently available. We continue to work with the SEC to research the provision of a regulated and effective bitcoin product to investors interested in bitcoin exposure.”
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