DeFi Market Showing First Sign of Exhaustion; Funds Moving Into Bitcoin, Ethereum & Stablecoins


This week, the decentralized finance (DeFi) saw the very first signs of exhaustion as the market experienced a dip.

Today, the likes of FNX (-40%), UMX (-25%), MTA (-16.23%), HOT (-13.14%), PERP (-12%), CREAM (-9.38%), hegic (-8.87%), and BADGER (-7.68%) recorded some losses.

The biggest and notable losers of the past 7 days include UMX (-40%), CREAM (-27.81%), ALPHA (-27.13%), BADGER (-23%), SRM (-16.62), AAVE (-14.71%), RUNE (-14.43%), and CRV (-11.81%).

The total market cap of the DeFi has lost $4 billion in the last three days to $78.69 billion, as per CoinGecko. At the beginning of this year, the market cap was just $25 billion, and before that, in November, $15 billion.

“The DeFi perp showed its first sign of exhaustion this week as it made new highs and tagged the Chaos PRZ on slightly lower volume,” noted HXRO Labs.

“There is no reason to think that DeFi won’t see continued, explosive growth this cycle, the only question is whether there will be a moment of consolidation before price discovery resumes.”

This week, the total altcoins market cap closed above a historic level after enjoying seven straight weeks of greens since breaking out in the wake of the BTC ATH.

It’s to be seen if this weakness will continue or it’s just a small setback before DeFi tokens roar even higher.

“Regardless of what comes next, most pro traders are taking at least partial profits, at these levels,” adds HXRO Labs. But is it moving into Bitcoin, Ethereum, or stablecoins?

Where is it going?

When it comes to the second-largest cryptocurrency, Ethereum has been moving quite slowly — breaking the ATH, moving back down, then moving up to break it again by a few hundred dollars, and then repeating it.

For over a month now, The volume on spot Ethereum has also been going down, indicating “a lack of interest in ETH at these price levels.” This might mean ETH has found a local top and needs to cool off.

For now, some of the profits from the wild rally are making into Bitcoin, which broke past $50,000 to nearly $52k. A couple of thousand dollars more and the leading cryptocurrency would surpass the $1 trillion mark.

The psychological barriers of $50k were broken amidst the MicroStrategy announcing the issuance of another $690 billion debt to buy even more Bitcoin. With MicroStrategy CEO Michael Saylor leading the charge through the bull, “putting his money where his mouth is,” it’s hard to be bearish, especially all the demand from institutions.

Despite strong price action and fundamentals, some market participants continue to call tops. But trader and economist Alex Kruger notes that people have been “saying that non stop since October,” adding that he isn’t selling his bags to Wall Street.

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