Apollo's Alpha: The best of DeFi has shown resilience and strength, while cashed-up VCs are waiting to deploy

David Angliss, an analyst with Australia’s leading cryptocurrency investment firm, Apollo Crypto, shares the fund’s regular take on what’s happening in the fast-changing and volatile cryptocurrency space.

It’d be remiss of us not to ask one of our Coinhead regulars for some brief 2022 reflections and a 2023 outlook or two. So we managed to grab the Apollo analyst for one final chat before he takes a much-needed little Christmas break from wrapping his head around promising DeFi, metaverse and NFTfi projects.

The best of DeFi has shown ‘resilience and strength’

Hey, David. Thanks for all the insights this year that you’ve given readers wandering their way to “Apollo’s Alpha”. What silver linings are you seeing at the tail-end of 2022?

No probs! This year, we’ve seen the demise of centralised finance in the cryptocurrency industry (CeFi). However, the silver lining is the emergence of decentralised finance (DeFi) protocols that have demonstrated their resilience and strength through consistent uptime, censorship resistance, transparent trading, and offering of high-yield products.

The failures of centralised entities such as Celsius, BlockFi, and FTX have damaged CeFi’s reputation and customers are increasingly demanding greater transparency in their cryptocurrency transactions.

As a result, decentralised platforms that can offer similar products and services as their centralised counterparts are gaining popularity, as exemplified by the success of protocols such as GMX and GNS.

How does the industry, and market, restore some confidence in 2023? What do you think needs to happen?

The crypto market is heavily influenced by macroeconomic factors and interest-rate decisions, so an improvement in these areas could lead to an improvement in overall sentiment.

According to interest-rate forecasts for 2023, there may be three more hikes, but at lower levels than we’ve seen in 2022. This could potentially relieve some of the downward pressure on asset prices.

VCs are waiting for macro-climate clarity

So, you’re predicting a better year ahead for crypto, generally speaking?

After experiencing one of the most challenging years in its history, it’s unlikely that the cryptocurrency market will see similar events in 2023.

The investors remaining in the market are not selling unless forced to do so through liquidations. Cryptocurrency venture capital firms and hedge funds currently have record-high cash positions on the sidelines, waiting to deploy once there is more clarity on rates and potential defaults.

Once they deploy, we may well see a turnaround in the market.

We’ll grab further insights and predictions on the crypto industry and market in 2023 from Angliss in the next Apollo’s Alpha column.

None of the views presented in this article should be taken as financial advice.