coinedition.com
In a recent analysis, Adam Cochran, partner at Cinneamhain Ventures (CEHV), highlights why he remains bullish on cryptocurrencies, particularly Ethereum (ETH), shedding light on the untapped potential of yields in the crypto market.
“[Yields are] part of why I think Ethereum (ETH) still has a 20x+ in its future,” Cochran said, arguing that yield returns can be derived from fees rather than inflation, making them non-dilutive.
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— Adam Cochran (adamscochran.eth) (@adamscochran) May 15, 2023
I think most people in crypto don't fully understand or appreciate yields and what it can mean for the crypto space at large – as it's one of the things that gets me incredibly bullish on the space.
And it's part of why I think ETH still has a 20x+ in its future.
The analyst draws a parallel between the traditional finance market and the crypto space, explaining that historically, the average yield for “risk-free” assets such as US Treasuries has hovered around 4.2% for both the 2-year and 10-year bonds.
However, Cochran points out that the financial crisis of 2008 and the subsequent increase in internet adoption and mobile device usage changed the rate regimes, with capital flowing from government bonds to riskier investments.
The analyst emphasizes that the yield offered by crypto is contingent upon its perceived risk and the supply and demand dynamics within the market. He also notes that in an inefficient market, the level of awareness among investors regarding yield opportunities plays a crucial role in driving occasional premiums.
According to Cochran, another crucial factor in understanding yields is the concept of “pull-forward,” which is the correlation between the yield rate and the price of a bond.
Ultimately, Cochran believes that the acceptable risk yields typically range from 2% to 4% in good economic conditions. He envisions a future where assets with a proven safety and yield track record, such as ETH, Synthetix Network Token (SNX), and Curve DAO Token (CRV), attract massive capital influxes.