On Wednesday and Thursday there was a clear sense of surrender among investors in top Ethereum DeFi tokens.
Market data shows that at that time, top-ethereum DeFi tokens fell by dozens of percent. Yearn.finance (YFI) plunged by over 20 per cent in one day, while many investors announced on Twitter that they would switch to Bitcoin and other “safer” investments.
But due to a strange turn of events, the DeFi market started pumping on Ethereum. This coincides with Bitcoin’s bullish price action. In bull markets, when BTC reaches its peak, profits are often temporarily distributed in Altcoins while investors try to accumulate more Bitcoin.
DeFi-Coins explode higher
Industry data show that the last 24 hours have been positive for the DeFi market.
Key coins in the sector (such as Uniswap (UNI), Aave (AAVE), Compound (COMP), Synthetix Network Token (SNX), Yearn.finance (YFI)) have risen 10-30% in the last few days following yesterday’s surrender.
Arthur Cheong, founder of Crypto Method Capital, believes that this reversal is a result of the “high volume” that has built up in the DeFi markets. He has shared a chart which shows that he has personally accumulated some AAVE at $28. The coin is now traded for around 38 dollars.
From the data in the chain, it is clear that there are institutional players like Choeng who collect DeFi coins en masse on Ethereum.
Data from Nansen show that the prominent Wall Street trading company Jump Trading owns crypto-currency worth at least $75 million – including compounds COMP, Keep Networks KEEP, HXRO, Numeraire (NMR), Orchid Protocol (OXT) and MakerDAOs MKR. The company has also spent $5 million in the last week alone to accumulate COMP.
Similarly, the block-chain analyst firm Santiment reports that “whales have added many corresponding $ETH-based #altcoins to their non-stock exchange wallets. $ETH, $LINK, $REN, $ELF, $KNC, & $ZRX are among those that have reached recent year highs.” The company also reports that “whales have added many corresponding $ETH-based #altcoins to their non-stock exchange wallets.
Is this the real low point?
A strong upswing, certainly – but not everyone is convinced that this is the real low point.
Ari Paul, CIO and CEO of BlockTower Capital, recently shared his thoughts on the DeFi market. Referring to a tweet that he shared in September, which predicted most of this downward movement, he writes that buying an asset at a price 85% below its all-time high is still not a reliable way to buy the bottom:
“Already 85 per cent down? This is a point at which one should *begin* to look for value, but remember that the decline from 85% to 95% down is another 65% loss”.