Over the past few months, the DeFi based protocols including Yearn.Finance, Compound, Synthetix, and Chainlink have seen their token prices undergo a recognizable peak, sparking talk that the long-awaited market could be here.
The DeFi boom is based on Ethereum [ETH] & propelled ETH’s price rise from $100 USD earlier in March to $470 USD later in August.
However, the DeFi euphoria has been fading in recent weeks, and there’s bearishness within the rest of the market too. For the past few weeks, ETH price has been hovering at around $350 USD.
In line with CoinMetrics, 72% of the top 250 cryptocurrency assets have declined in price week over week, and that number hikes to 93% for the month over month analysis. According to Messari’s DeFi chart, across September, most DeFi tokens corrected by anywhere between 15% – 85%, with bZx Network losing 85%, Curve down 78%, Swerve [-76%], Ren [-57%], Balancer [-53%], THORChain [-52%], Synthetix [-34%] & AAVE [-29%].
To better understand what’s happening here, let’s look a rolling 7-Day metric employing the ratio of assets making new 30 day highs less a ratio of these making 30 days lows. The chart shows bearish levels not seen since the selloff in March of this year – but thankfully still an extended way off the depths of cryptocurrency winter earlier in 2018.
While the earlier pullback has some traders wondering if the party is over, trend reversals are common in bullish markets. Within the bullish market of 2017, there have been numerous price trends.
For instance, earlier in 2017, when Bitcoin [BTC] hit $1,180 USD for the 2nd time, it triggered a huge sell-off and the leading cryptocurrency fell by almost 40%. And in fact, that didn’t halt Bitcoin [BTC] from reaching an all-time high around $20k later that year.
Within the official newsletter, DeFiWorld suggested corrections were normal and just a part of a bigger trend, adding this year reminded them of 2016.
“We move in bubbles & 4-year cycles. While most are just considering about what happens today, this week, or this month, you ought to zoom out & reflect where we are really heading. The future trend is clear: It’s upwards.”