While Bitcoin has been relatively stagnant over recent days, top coins in the decentralized finance have been undergoing strong corrections. Analysts think that this could result in a strong correction in BTC itself.
BITCOIN COULD BECOME WEAK AS DEFI COINS FORM WEAK TRENDS
Yearn.finance (YFI), widely regarded as the DeFi space’s most prominent project, has slid over 35% from the all-time highs set just weeks ago. The coin now trades at $27,000, far below the highs of $44,000.
Coins like Aave’s LEND, Synthetix’s Synthetix Network Token, amongst many others, have also dropped in the past few days as selling pressure mounts after a parabolic rally.
“$YFI tanking a little, used is as a proxy for DEFI in general since it’s the billion+$ cap and OG coin. Tend to think DEFI doing bad is not good for $BTC since it’s a sphere which brought big investments into $Crypto past months. Would keep an eye, on $ETH as well, get a vibe.”
No explicit analyses have been done to confirm if Bitcoin and DeFi correlated, but it’s worth noting that
DEFI’S LONG-TERM UPTREND STILL INTACT
Qiao Wang, former Messari head of product and a crypto trader, recently commented:
“From an investment point of view, BTC pre-2013 and ETH pre-2015 were once-in-a-lifetime asymmetric bets. DeFi pre-2021 is once-in-a-decade IMO (until proven wrong). If you’ve missed the first two don’t miss the latter.”
DeFi rallying over the long run, assuming all segments of the crypto market are correlated, would likely drive interest in Bitcoin and other top cryptocurrencies.Chart from TradingView.com Author: Nick Chong