Despite 10% bounce in AAVE and YFI, analysts don’t think the DeFi bottom is in 🚨 This article is 4 years old...
News ▸ Aave · Ethereum · Yearn.finance ▸ DeFi
Despite 10% bounce in AAVE and YFI, analysts don’t think the DeFi bottom is in
2 min read
Updated: Feb. 4, 2021 at 8:05 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
As the short-term future of decentralized finance (DeFi) coins has become uncertain over recent days, analysts and investors in the space have weighed in on what they think comes next.
Many assert that the fundamentals of this space are better than ever. Case in point: the total value locked in DeFi contracts recently hit an all-time high above $12 billion despite the value of DeFi coins plunging by dozens of percent from their highs.
Still, that’s not to say that this segment of the market has bottomed. A number of analysts recently shared the opinion that Ethereum tokens have further to fall.
This comes after a number of top coins in this category, including Aave’s AAVE and Yearn.finance’s YFI, have surged approximately ten percent from their local lows. Other DeFi coins such as Chainlink have also surged higher as buyers enter positions in popular projects for the long haul.
DeFi has further to fall, multiple analysts say
Much of the DeFi space has yet to find a long-term bottom, analysts say as both Bitcoin and Ethereum find short-term highs in their price action.
Qiao Wang, the ex-head of product at Messari and a popular crypto analyst, recently said:
‘Assuming BTC doesn’t moon anytime soon, a -50% nuke is more likely than a +50% from here for DeFi IMO. After that we can begin a 2017-style bull market for the quality DeFi assets.”
Assuming BTC doesn’t moon anytime soon, a -50% nuke is more likely than a +50% from here for DeFi IMO. After that we can begin a 2017-style bull market for the quality DeFi assets.
— Qiao Wang (@QwQiao) November 1, 2020
The pseudonymous cryptocurrency trader “Degen Spartan” also shared a similar opinion.
The investor, who was a champion of DeFi yield farming all summer, recently said to Twitter:
“So basically if BTC gigapumps out of 14k I’ll become neutral on defi alts in that I think they would hold their USD value from the rising tide (but crater in sats and eth). If normies start coming in, I’ll be back to bullish.”
Others have taken a “glass half full” approach, arguing that while some coins pertaining to this space have bottomed, the majority still have room to extend to the downside.
As reported by CryptoSlate previously, Su Zhu, CIO and CEO of Three Arrows Capital, said that while he thinks investors will begin to deploy capital into “top-tier” DeFi coins, he expects 95 percent of altcoins to be down against Bitcoin in the coming months.
Bitcoin weakness unlikely to help
Potential weakness in the price of Bitcoin is unlikely to help the price of altcoins moving forward.
The stock market underwent a strong move lower last week on fears of a continuation of the pandemic and further lockdowns. The U.S. Presidential Election also stands to further drive equities and risk-on assets lower.
While Bitcoin has begun to decouple from the S&P 500, analysts fear that in a world where equities begin to move strongly lower once again, few assets will be spared from a sell-off.
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Aave
$336.439
Aave is an open source and non-custodial protocol enabling the creation of money markets.
Messari
Messari is a fast growth startup in New York that is building the next generation data layer for the global cryptoasset community.