DeFi Rallies on China Ban as Chinese Turn to Decentralized Projects, Crypto Prices Recover to Pre-ban Levels

Last week, China cracked down on crypto and declared virtual currency-related business activities, including the provision of services by overseas exchanges to Chinese residents through the Internet to be “illegal financial activities.”

As we reported, this sent the prices of cryptocurrencies crashing, but that dip was not the one to sell your tokens as historically, it hasn’t turned out well for the sellers.

Crypto assets have already started to recover and are now back at the levels before the crackdown-induced sell-off.

Bitcoin was trading above $45k when the China ban news struck, and we fell to about $40,750. On Sunday, the market started to recoup these losses and went to $44,400, and on Monday are hovering around $44k. BTC -0.51% Bitcoin / USD BTCUSD $ 26,332.03
-$134.29-0.51% Volume 11.12 b Change -$134.29 Open $26,332.03 Circulating 19.4 m Market Cap 510.79 b 1 y SEC Commissioner says NFTs Might Fall Within Their Jurisdiction, Gensler Hires Senate Aid for Crypto Policy 1 y A Possible Crypto Recovery Moving Into New Year, Risk-on Sentiments Send The Stock Market to Another Record High 1 y Bitcoin and Ether Dump More Going Into Year-End, ETH Killers Showing Great Momentum

Akin to Bitcoin, Ether fell to $2,730 on Friday before climbing to $3,165 on Sunday and is now keeping around $3,100. ETH -0.63% Ethereum / USD ETHUSD $ 1,828.11
-$11.52-0.63% Volume 4.75 b Change -$11.52 Open $1,828.11 Circulating 120.23 m Market Cap 219.79 b 1 y Coinbase Predicts Substantial Growth of Newer L1 Chains & Institutionalization of Regulated DeFi 1 y A Possible Crypto Recovery Moving Into New Year, Risk-on Sentiments Send The Stock Market to Another Record High 1 y The Sandbox Game Is Migrating to Ethereum Sidechain Polygon and Launching A DAO in 2022

The total crypto market is up more than 7% in the past 24 hours and above $2 trillion.

As for exchange tokens that took a big hit, they have recovered as well. After dropping 16%, BNB saw an 8% increase in its value. OKB, which tumbled 42.6% over the period of two days, has rallied 53% since Sunday. Meanwhile, HT fell the hardest by 52%, only to register a 25.5% rise in value. BNB -4.28% BNB / USD BNBUSD $ 249.13
-$10.66-4.28% Volume 583.24 m Change -$10.66 Open $249.13 Circulating 155.85 m Market Cap 38.83 b 1 y SEC Rejects Another Spot Bitcoin ETF, Binance Announces New System to Remove BNB from Circulation 1 y BitMEX Launches BMEX Token for Active Users, US Not Eligible for Airdrop 1 y Crypto Outliers: Terra (LUNA) Amasses $16.9 Bln & Surpass BSC, Avalanche (AVAX) Aims for 1 Million Daily Transactions OKB -1.41% OKB / USD OKBUSD $ 44.21
-$0.62-1.41% Volume 3.36 m Change -$0.62 Open $44.21 Circulating 60 m Market Cap 2.65 b 1 y CME Bitcoin Futures Open Interest Cracks A New ATH, Ethereum Aims for $4k Again 1 y China Update: Binance, OKEx, and Gate Kicks Out CNY & Existing Users, WeChat Blocks Searches, Mining Share Goes to Zero 1 y Shift to Risk-on: Bitcoin Is Up 12% Already in Uptober Amidst Stock Market Weakness HT 0.76% Huobi Token / USD HTUSD $ 2.88
$0.020.76% Volume 21.63 m Change $0.02 Open $2.88 Circulating 162.23 m Market Cap 466.49 m 1 y Huobi Japan Set to Offer Derivative Following Regulatory Approval 1 y DeFi Rallies on China Ban as Chinese Turn to Decentralized Projects, Crypto Prices Recover to Pre-ban Levels 2 y Tech Stocks Dragging Bitcoin, Ether, & Crypto's Down, But 'Fundamentals Still Strong'

However, the star of this recovery was the decentralized finance (DeFi) sector. Earlier last week, DeFi’s market cap was around $103 billion, and today, it is at $123.2 billion.

The biggest contributor to this strong upward movement includes IDEX (37%), PERP (24%), HEGIC (19%), DYDX (16%), RGT (15%), CRV (14%), UNI (11%), and RAY (10%).

Good activity this weekend with strong reversal yesterday for DeFi tokens, UNI +35% in last 24 hours pic.twitter.com/vpuAKZSx3h

— Coinbase Institutional (@CoinbaseInsto) September 27, 2021

The total value locked (TVL) in DeFi has also climbed to $178.4 billion, up from $163 billion early last week and reaching $195.9 billion ATH earlier this month.

With China declaring crypto activities illegal, the Chinese are turning to DeFi to access cryptocurrency projects.

“All DeFi tokens should be rallying hard on the back of the “China ban” news. And along with it, all of the underlying layer 1 and 2s supporting DeFi. As well as NFTs. Anything that is decentralized literally,” noted Spartan Black of crypto fund The Spartan Group.

A large number of Chinese users will flood into the DeFi world, and the number of users of MetaMask and dYdX will greatly increase. All Chinese communities are discussing how to learn defi.

— Wu Blockchain (@WuBlockchain) September 26, 2021

Similar sentiments are shared by Mathew Graham, CEO of VC firm Sino Global Capital who said on Twitter, “China crypto is basically one big DeFi education seminar these days.”

“In my view the potential for a significant DeFi adoption catalyst is quite considerable,” Graham added.