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Top fund manager thinks Ethereum DeFi shorts make little sense here

It’s been a brutal past two months for the DeFi market. While the fundamentals of this space are arguably stronger than ever as the total value locked in DeFi contracts and other metrics tick higher, coins pertaining to the space, along with Ethereum, have plunged from their summer highs.

While Bitcoin is pushing new year-to-date highs, DeFi coins are in the dumps.

One analysis by a crypto-asset analyst at the start of October indicated that the average DeFi coin had dropped 65 percent from its summer highs. Since that analysis, the state of the decentralized finance market has worsened as many Ethereum-based coins have continued their descent.

Though, Su Zhu, the CIO and CEO of Three Arrows Capital, says that the opportunity to short this altcoin sector has likely passed.

DeFi short opportunities may not be as lucrative anymore

While Three Arrows Capital has made its fair share of investments in the DeFi space, Su Zhu was one of the first investors in the space to predict a decline in this sector, or at least in altcoins relative to Bitcoin.

The prominent investor now thinks that DeFi shorts may not be lucrative investment opportunities from here.

He wrote on Oct. 30 that he doesn’t think “DeFi shorts have good r/r at this point” against the U.S. dollar, adding that he thinks “top-tier” projects are reaching points where long-term investors will deploy fiat to accumulate investments for the long run.

a roller coaster update: i dont think defi shorts have good r/r at this point, v usd long defi/eth cross could make sense top-tier projects are approaching lvls where long-term investors will look to deploy fiat i expect 95% of coins to be down v btc over the next few months — Su Zhu (@zhusu) October 31, 2020

Even still, he caveated this with the statement that “over the next few months,” he expects 95 percent of all altcoins to be down against Bitcoin.


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