DeFi season could be over as Bitcoin and Ether pack bags for the moon

Ethereum has seen increased popularity throughout 2020 due to the rise of DeFi, but some skepticism is being voiced over the long-term prospect and sustainability of DeFi.

"Defi plays got overly speculative earlier this year, as they often do in this industry. We can see some of those flows now moving back towards bitcoin, with bitcoin dominance trending upwards post the DeFi sell-off." DeFi losing power.

As profits from the DeFi alt season trickle back into Bitcoin, the long-term sustainability of decentralized finance may come into question.

"The mellowing in immediate hype for DeFi will be disappointing for the short-term trader but is likely good overall for the industry. The bubble over the summer was not sustainable but did show that various aspects of DeFi are actually useful for particular use cases."

While sustainability seems to be the main blocker for any long-term success of decentralized finance, both when it comes to the returns on DeFi and to the technical aspects of Ethereum, others have cited a shady crypto industry, complicated interfaces and a general lack of popularity as deterrents to the continued growth of DeFi.

Munro stated: "73% of the panel said 'scams, excessive hype and market manipulation' were a key obstacle to DeFi growth, and some likened DeFi to the ICO boom in 2017.".

The majority of panelists in Finder's cryptocurrency report said DeFi applications will likely continue to steadily grow over the next 12 months in terms of value locked and the number of users.

While DeFi may have been the catalyst for the summer's crypto activity, institutional interest may be the driving force for Bitcoin going forward, according to Lanre, especially because big corporations such as MicroStrategy, Stone Ridge and Square are now getting involved,.

In the meantime, some institutions are still betting on the DeFi sector, with Pantera Capital recently disclosing during a webinar that DeFi will be at the center of the upcoming bull rally.

While many still believe in DeFi, most seem to think that the DeFi price hype cycle is done and that slower growth for the industry will follow, especially as Ethereum is able to scale.