The Bitcoin price showed enormous strength in the past 30 days. The Bitcoin Lifestyle price rose by 30 percent in October alone. As BTC picks up, the Decentralized Finance (DeFi) market is looking deep red. The majority of the largest DeFi tokens, such as YFI, UNI, COMP or UMA, recorded extremely high percentage losses in October. Only Chainlink (LINK) and wBTC were able to buck the trend.
In this article we take a closer look at the massive price correction in the DeFi market. What about Uniswap (UNI), Yearn.Finance (YFI) and Co?
Decentralized Finance (DeFi): LINK and wBTC as winners
The DeFi market suffered particularly badly last October. Despite or precisely because of the good performance of the Bitcoin course , many DeFi tokens could not grow to the same extent as BTC.
The positive exception to this downward trend, which we will look at in more detail in a moment, does not apply to the following three cryptocurrencies: Chainlink (LINK), Wrapped Bitcoin (wBTC) and Maker (MKR).
The demand for synthetic BTC in particular increased enormously in the past, so that the total market capitalization of wBTC also increased sharply in October. The price increase in Bitcoin naturally also plays a role here. LINK was also able to record a price increase of 13% in October.
Chainlink also benefits from the current performance of Bitcoin. The LINK rate rose by a good 12 percent in the last 24 hours.
UNI, YFI, COMP and UMA with deep red numbers
However, if we turn our gaze to the “classic” DeFi tokens, we see numbers in deep red. A massive correction of the course took place in October and hit Yearn.Finance (YFI), Uniswap (UNI), Compound (COMP) and UMA (UMA) in particular.
In the period from October 1st to October 31st, the price developments looked like this:
This makes it clear that YFI and UNI in particular are among the losers in October. As a result, the market sentiment on the DeFi market has also turned for many investors. While the mood was still bullish in the middle of the year, the bears have taken over in recent weeks.
However, under no circumstances should one write off the entire decentralized finance market. It is precisely such correction phases that are common within normal market cycles. After periods of excessive growth, phases of consolidation and correction follow.
Little has changed in the fundamental values of many DeFi projects . Rather, we observe a so-called capital roll over effect, in which capital flows from the DeFi market in the direction of Bitcoin. A phase of consolidation will also take place with the Bitcoin course, which is currently strongly outperforming. As a result, it is likely that investors will then shift their capital back towards DeFi tokens.