Jeff Owens, co-founder of Haven1, says that any impact a potential spot bitcoin ETF rejection by the SEC has on the DeFi market will “be temporary and has nothing to do with fundamentals in the space.”
However, he says that “in the short term, lower prices across crypto tokens will lead to liquidations and a drop in total value locked (TVL), which may also cause a spike in APRs for yield farming.”
Jeff Owens, co-founder of Haven1, says:
“If the rumors that the Securities and Exchange Commission (SEC) will reject all spot bitcoin ETF applications this month are true, we will see a knock-on effect on decentralized finance (DeFi) from the sell-off across the crypto market. However, this is nothing but background noise, since a BTC ETF approval or rejection doesn’t impact fundamentals in the DeFi market in any way.”
Owens added that beyond “the obvious threat of liquidations from leveraged positions, which will lead to a drop in the total value locked (TVL) in DeFi, we are also likely to see on-chain outflows to exchanges or fiat bridges as retail investors flee to safety. They would then sell their tokens back into fiat currencies.”
He further noted that this would also “contribute to the drop in TVL across the ecosystem, following a revival in the last few months. Since the start of November 2023, DeFi TVL is up around 24% to sit at around $52 billion, though it remains well away from its all-time highs. Lower TVL may, in turn, lead to higher APRs for yield farming as the algorithms try to attract more money, which could be attractive to those who remain in the market.”
He also mentioned that “none of these moves will be meaningful in the grand scheme of things and will mark a temporary blip in the ongoing recovery in DeFi.”
He concluded that the fundamental drivers of this recovery “remain sound, while volatility is simply part and parcel of the crypto market.”
While Owens’ analysis does confirm that any product, service, or set of protocols must have a meaningful value-proposition in order to gain mass adoption, there is no denying the enormous potential of influential entities impacting markets in a major way. At the time of the last bull market, a huge contributor to the rally was Elon Musk’s announcement that Tesla would be adding Bitcoin to its balance sheet.
Undoubtedly, people care about what highly prominent people think about crypto and their investments in this space or their decisions related to the digital assets sector will have long-term implications for the industry. With that being said, fundamentals are extremely important because they are like the pillars upon which an entire ecosystem can thrive and flourish in a sustainable manner.
As covered, Haven1 is an EVM-compatible Layer1 blockchain “designed to offer a secure and trusted environment to drive the mass adoption of on-chain finance.”
Incubated by the teams “behind digital wealth platforms Yield App and Coinbag, Haven1 incorporates a provable identity framework and robust security guardrails at network level to provide retail, professional and institutional investors with an on-chain finance platform that facilitates innovative use cases and closes the gap between traditional finance and Web3.”
