While Bitcoin is in its strongest bull market since 2017, DeFi tokens have actually been selling off.
Bull Run and Subsequent Correction
This year was terrific for the DeFi tokens until September; some grew by more than 5,000% from January 2020. The DeFi Index we are analyzing was created towards the end of June, and therefore we are unable to showcase the entire uptrend. However, we can see the end of the bull run, which occurred this summer.
On September 1st, the entire Crypto market experienced a pullback, and amid a few exceptions (e.g. THETA, BNB), all coins stayed at lower levels for the rest of the month. In October, Bitcoin started gaining strong momentum, rising around 28% and closing the month at a yearly high – that’s when the main divergence between Bitcoin and the DeFi tokens appeared. While Bitcoin continued to grow, the DeFi tokens intensified their sell-off, reaching their July levels at -60% from the all-time high.
Where to Next?
We currently appear to have bounced off the $1,375 level, which acted as support throughout the end of June. The support at $1,375 is the last level that we can see on this graph (due to the index’s relatively recent arrival). Therefore if it breaks, we will have to look at the individual tokens to identify other support levels.
As the DeFi tokens’ price are not correlated with BTC and the rest of the market at the moment, it is hard to tell what will happen next. Today the tokens did follow Bitcoin in its day, but whether they will continue to follow is still uncertain. However, if you believe in the DeFi tokens’ fundamentals, then this is an extraordinary opportunity to buy some at a 60% discount.