Kain Warwick is a founder of Synthetix, a multi-asset platform that provides cryptocurrency exposure for real-world goods. He gives an explanation of the role of Bitcoin (BTC) dominance cycles in the progress of decentralized finances.

Searching for the money flow

Mr. Warwick supposes that Bitcoin (BTC) dominance moves can indicate an inflow of money into DeFi products. According to him, such processes demonstrate 'cycles and epicycles'.

When BTC dominance shrinks, the profits flow into altcoins. It occurred for the first time in 2017 when the money came from Bitcoin (BTC) to Ethereum-based ICO products.

These gains were erased during the tremendous crypto winter in 2018, but in mid-2019 liquidity returned from ETH/BTC into emerging DeFi tokens. During Q4, 2019 and in early 2020, money from these projects passed to another wave of low-cap DeFi products.

Mr. Warwick named Maker (MKR), Chainlink (LINK), Augur (REP) and Synthetix Network Token (SNX) among the beneficiaries of this process.

On the verge of the third cycle

He believes that these cycles will repeat. The last upmove in the Ethereum (ETH) price made many large-cap DeFis perform very well, but a significant amount of money is going to low-caps in this segment. So, this may bootstrap interest in Loopring (LRC), Aave Protocol (LEND), Gnosis (GNO), Ren (REN) and others.

Then, this stream of money can return to Ethereum (ETH) directly or be disseminated between tokens like MKR.

Mr. Warwick also mentioned two groups of solutions that are the most prospective of all of the blockchain-based products: 

What is pretty clear is that outside of the macro market insanity the only real things going on in the space are happening on Ethereum in both DeFi and scaling. And people are finally noticing

Along with that, he warned that the modern crypto market is much more complicated than in 2017 so those who use old patterns may be 'steamrolled by the wave of DeFi enthusiasts'.