Ethereum and Bitcoin are up 41% and 14% respectively. According to Messari, this rise has led to signs of resilience in the cryptocurrency market. However, the FED’s attempts to fight inflation continue. Major industry players such as hedge fund Three Arrows Capital are experiencing liquidity crises. Therefore, concerns about price decreases due to the crises continue. Despite this, major altcoin holdings continue to gain more traction. A DeFi expert shared 4 altcoins that he expects to rise.
DeFi expert: “This altcoin is investment”
Ren Yu Kong, a 25-year-old DeFi portfolio manager, analyzed altcoin projects and looked for the event behind the bullish strength in the current market. According to him, one of the drivers of the rise was the highly anticipated update of the Ethereum network, Merge. “There is definitely a strong outlier that everyone should see, and that is Ethereum,” said Kong, who manages a DeFi fund set to be set up for hedge fund BKCoin Capital. He then said:
“Crypto has never been completely independent of equities or traditional markets. But Ethereum Merge is definitely a very powerful narrative right now. Because it causes price movements contrary to the markets.”
The first of five planned upgrades on the network, Merge is migrating Ethereum from Proof-of-Work to the energy-efficient Proof-of-Stake model. The upgrade, scheduled for mid-September, will “set the stage for future scaling upgrades, including sharding,” and reduce energy consumption by approximately 99%, according to a statement from the Ethereum Foundation. Addressing the environmental impact of blockchain is very important. Because it has the potential to lead to the flow of both institutional capital and retail engagement for the ecosystem. So what other altcoin projects is Kong looking forward to bullish on?
“There is a buying opportunity in these 2 staking solutions”
Kong points to staking solutions like Lido (LDO) or Rocket Pool (RPL). With Merge, he says these could have huge upside potential. Lido allows its holders to earn passive income by staking ETH. According to Kong, Lido is well prepared in the event that a trader quickly exits their staked ETH position. According to him, the project has the largest available liquidity as a DeFi platform.
Second, it highlights Rocket Pool. This altcoin is the second largest staking provider behind Lido, offering an average annual return of 4.03% for ETH2 staking. Essentially, Merge should create a more robust industry for staking. This is likely to result in gains for RPL and LDO holders. The expert states that Rocket Pool has less liquidity than Lido. However, according to him, the decentralized nature of Rocket Pool makes it a strong altcoin:
“Rocket Pool owns less than 5% of ETH compared to Lido. But one of the most decentralized staking solutions, they hold 47 times the node count of Lido. More people will stake their ETH with Merge. So they have a big plus.”
“I am also suffocating in Layer-2 altcoin projects”
Kong points to Ethereum layer-2 scaling solutions such as Polygon (MATIC) and Optimism (OP). The DeFi expert says these altcoin projects can also be attractive investment opportunities. Both altcoins run on top of Ethereum as a layer-2 scaling solution. As Cryptokoin.com reported, L2 solutions allow L1 networks to operate with lower gas fees and higher speeds. “Merge prospects are strong enough to drive up the price of layer-2 solutions,” Kong said.
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