Still, positive signs of an eventual recovery include stablecoin inflows. Stablecoins are a type of cryptocurrency whose value is pegged to another asset, such as the U.S. dollar or gold.
Last week these inflows jumped to $490 million, 58% higher than the previous week, the report said, as “real world use cases like payments/remittances are adopted and real-world data providers like decentralized oracle networks increase functionality.”
Bank of America expects regulatory clarity to support decentralized finance adoption. DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain without the use of traditional intermediaries.
The jump in ether’s (ETH) price from mid-July to mid-August continues to reverse as investors digest that the Ethereum blockchain’s switch to proof-of-stake (PoS) does not fix scalability concerns or high fees, and these investors shift to a “wait-and-see approach regarding future upgrades,” the note said.
The transition from proof-of-work (PoW) to a more environmentally friendly proof-of-stake consensus mechanism is the first of five upgrades for the Ethereum blockchain, a process that was called the Merge.