DeFi tokens continue to suffer as Bitcoin dominates the market

IN BRIEF

  • DeFi tokens continue to fall as the BTC price rises.
  • Many leading tokens have lost more than 70% since their highest records.
  • TVL DeFi still remains high at over $11 billion.

Much of the interest and media frenzy surrounding the decentralised finance (DeFi) sector that emerged last summer has certainly begun to diminish, particularly in the case of token prices. Many of the best performing DeFi assets are still bleeding despite the upward trend in the broader cryptomoney market.

In terms of total locked-in value, the DeFi space still looks optimistic with only an 8% drop in cryptos guarantees in the ecosystem from its historical high. The current figure stands at $11.3 billion according to DeFi Pulse, however, the dollar-denominated measure that remains high could be due to the fact that Ethereum’s prices are recovering $400.

The same cannot be said for the majority of DeFi’s tokens, however, as most of them continue to be depleted while Bitcoin Optimizer market share slowly consumes them. Messari researcher Jack Purdy attributes this to an oversaturation of projects combined with insufficient new capital coming into the space.

DeFi dump continues

Funds that were randomly thrown into DeFi tokens over the summer appear to be moving to Bitcoin as the BTC recently reached a near three-year high of $14,400.

Looking at the major tokens by protocol, Uniswap UNI is suffering among the others with another 5% drop so far today and is trading for $1.82.

Since its historic high of nearly $8 in mid-September, the UNI has lost 76%. This decline could well be further aggravated when the token race ends on 17 November and millions of dollars are thrown into the market.

Second in terms of TVL protocol is the pillar of the MakerDAO crypto, which is holding up well as its native MKR token has remained relatively stable in terms of price over the past year.

Wrapped Bitcoin is third in terms of TVL and has also increased to record levels of more than $2 billion of BTC tokens on Ethereum.

More suffering on the horizon

Compound Finance’s COMP token continues to take a hit with a 74% drop from its peak, while Aave’s 100 times supply reduction programme has not prevented its new asset from dumping 52% since last month.

The token Curve DAO, CRV, is in a world of suffering losing a further 4% today and 98% since its historic peak during the DeFi media frenzy in mid-August. Synthetix is up for the year but has lost another 64% since its peak of $7.50 at the end of August.

Yearn Finance’s YFI climbed to $44,000 at the top of the DeFi FOMO, but has since fallen 80% at current prices around $8,450.

The pain is even greater for a host of other DeFi tokens such as Sushi and Swerve, which have virtually collapsed into digital dust.

Bitcoin flirts with $ 14K – and more and more people google for „how to buy bitcoin“

Rising prices due to bullish developments in the industry could spur Google searches. Google Trends suggest that new money is entering the Bitcoin market.

The recent volatility in the stock market could force a larger number of institutions to consider exposure to BTC.

Driven by various bullish developments, the Bitcoin price has had an impressive month behind it. Over the course of October, the price of the leading cryptocurrency rose by more than 25%.

Data from Google Trends suggests that soaring prices are attracting the attention of retail investors, apparently non-industry investors. Meanwhile, others claim that the return of volatility has also sparked institutional interest in the market.

Bitcoin is getting bullish

After starting October at less than $ 10,900 and trading above $ 13,750, sentiment in the Bitcoin market is very bullish right now. In this month alone, the BTC price has increased by more than 26%.

Such price increases have clearly not gone unnoticed. Google Trends, one of the simplest metrics for assessing public interest in the industry, suggests that new money might be coming into the market.

Far from the all-time high of interest observed at the height of the bull market in 2017, the number of people searching for the phrase “how to buy Bitcoin” on Google rose in October. Previous highs in the metric also coincided with BTC price runs.

The searches for „how to buy Bitcoin “ increased in May, August and December 2017, also in early July 2019 and during the recovery from the price plunge in March 2020. In each example, the Bitcoin price rose rapidly in a short period of time.

The renewed interest is likely to be related to a number of bullish developments around Bitcoin. Large corporate-level investments, an optimistic report from JPMorgan, and PayPal’s interest in cryptocurrencies are likely to have contributed.

Is it institutions and small investors this time?

Google Trends data is likely to illustrate the growing interest among retail investors in Bi t coin. While the average investor is likely to turn to the popular search engine for information on how to buy BTC, it seems doubtful that institutional buyers, with tens or hundreds of millions to choose from, would approach the market this way.

However, market analyst Travis Kling believes that volatility in stock markets may have piqued the interest of institutional investors as well. It highlights the growth in the CBOE’s (VIX) volatility index, which coincides with that of the Bitcoin price.