- Major decentralized finance (DeFi) tokens drop as Bitcoin (BTC) spiked.
- Data was gathered among 13 top DeFi tokens and Bitcoin for 45 days.
- The price spike is due to investment by major corporate outfits into Bitcoin.
Major decentralized finance (DeFi) tokens such as Yearn.finance (YFI), Uniswap (UNI),l Aave (AAVE), and many others drop as Bitcoin’s (BTC) value spiked.
DeFi Token Price Drops
The said DeFi tokens which created tremendous hype in the crypto space face many hindrances to surpass their all-time highs. That said, these tokens are performing poorly while, Bitcoin continues to boom.
Moreover, Yearn.finance’s total market capitalization currently stands at over $288 million from a high of $1.27 billion in September. In addition, YFI reached an all-time high of over $40,000 in the said month. This ATH has outperformed Bitcoin’s $20,000 peak price in December 2017.
Decentralized P2P exchange Uniswap’s UNI token took the entire cryptocurrency space by storm with its volatility. Currently, the price dropped to $2.15 from $4.43 on October 1. Likewise, its market capitalization fell to $459 million.
Moreover, UNI token has 1 billion UNI minted at its genesis block, and will become available in the next four years. On September 18, UNI token reached an all-time high of $7.82 from its launching price of $1 on September 17.
Several other DeFi tokens Maker (MKR), UMA (UMA), Sythentix (SNX), Compound (COMP) also declined to $515, $6.52, $2.35, and $85 from $596, $8.9, $4.85, and $134.9, respectively, at the start of October.
Negative correlation between DeFi and BTC
This slump in the DeFi market is due to the increasing price of Bitcoin, according to Market Science Co-Founder BitDealer. He analyzed the 45-day correlation between price performance of the top 13 DeFi tokens with Bitcoin. Moreover, based on the results, DeFi tokens could continue to struggle if BTC keeps surging.
Interesting to see how consistent the negative correlation between BTC and DeFi is.
— ₿itDealer (@Bitdealer_) October 31, 2020
Moreover, Bitcoin’s price has increased by over one-third in the past month — $14,000 at the end of October — after global payments giant PayPal announced it was entering the crypto industry.
However, BitDealer interpreted that the price boom of BTC is due to the DeFi price drops as money moves to the chief cryptocurrency. In addition, this may also be due to investments in bitcoin by corporate outfits such as Microstrategy, Square, CoinShares, Grayscale, and 3iQ.
In spite of the DeFi’s break from its market hype, it still has a huge total value locked (TVL). Today, the DeFi space has a TVL of $10.99 billion. This shows an indication that there are still many investors that believe in the potential of the ecosystem.