During the last bull run defi was all the rage. It became so popular that it even sparked the classic Rug Pulls and straight up scams that always seem to come when something grows in popularity. I mean you gotta be a special kind of human to pull junk like that off to be honest. I know I wouldn't be able to sleep at night.

That being said DeFi has had a rough road for the last few years since then it's been a rough ride in terms of hacks, low liquidity and really v4 of defi in just those few short years.

What we are seeing though is constant development, better security and new features in the defi space.

What we are not seeing is a increase in DeFi token prices however. But is that all about to change?

There could be one catalyst that's about to take shape over the next few months of which I want to look into today.

Interest Rates

Yep, that's really what it all comes down to. Right now most stablecoins in DeFi are pushing out around 5% and some times higher in terms of their payout. This is because inflation rates are crazy and also interest rates are crazy.

However the last week we have seen a few things unfolding already. A lower inflation rate (still high however) and a very real possible rate cut by end of year followed by more rate cuts most likely rolling into 2025.

What this will do is open up liquidity in the markets. It will make loans cheaper to get but the real kicker is it will make savings accounts interest rates and other rates also fall. So those treasury bonds and bank accounts paying out 5% will start to dry up but it will take time.

That timing for myself I think will be a full year from now before it's really felt and things start to drastically shift.

As lower fiat interest rates kick in people will be looking for other methods to start earning good APR again and that will most likely come in the form of DeFi projects once again.

This was a good primary investor factor back during the last bull run was earning 10%+ in DeFi while banks paid out never nothing in interest. With high inflation the last three years the tables have shifted in a big away and soon people will be looking to stock pile into assets with solid growth.

Right now many people and investors have a VERY safe method of return on their money. An over 5% rate on their money is currently beating inflation and providing a huge amount of wealth accumulation with little to no risk at all.

However when that changes to sub 3% in which it doesn't beat inflation a higher risk tolerance will kick in.

There's new sectors at play here now as well so you'll want to be looking at meme coins for potential massive gains and they are often used for fast liquidity over defi and dex channels. Personally I'm on a goal for 1 billion $PEPE to be earned free from places like Earn-pepe and Feyorra which have been paying out and have produced a rather decent amount of pepe so far. I'm also always hitting the bitcoin side of things with a trusted side of over 6 years now called Freebitco.in.

Overall things are going to move fast I believe come 2025. The key things you're going to want to watch are inflation rates CPI and outside of the CPI. You'll also want to watch and fed interest rate news and see how far savings account interest rates start to fall.

Posted Using InLeo Alpha