Decentralized finance, or the DeFi market, has seen a sharp correction over the past 12 hours as Bitcoin (BTC) was unable to breach the $ 41,000 level.
Meanwhile, analysts say profits from DeFi tokens are flowing back into Bitcoin, although the DeFi market remains lagging despite BTC’s recovery over the past week.
So what’s next for the DeFi market?
Both major DeFi tokens and small market value cryptocurrencies have struggled to recover from Bitcoin over the weekend.
DeFi bluechip’s typical assets include the likes of Aave (AAVE), SushiSwap (SUSHI), Uniswap (UNI), Maker (MKR), Compound (COMP), and Synthetix (SNX).
Major DeFi tokens with slightly smaller market boundaries include Alpha Finance (ALPHA), Yearn.finance (YFI), and 0x (ZRX).
The main reason behind the DeFi market correction is that the profits of DeFi Tokens have been pouring into Bitcoin as BTC began to decline.
This trend has amplified selling pressure on DeFi tokens, especially since the Bitcoin / Ether (ETH) pair has seen short-term weakness in the past two days.
However, the cryptocurrency market is moving fast, and therefore market dynamics could change rapidly over the coming days, especially with the launch of CME Ether futures contracts on Monday.
At the same time, another DeFi spike could take off because of the bitcoin price that crossed $ 40,000 this time and merged between $ 41,000 and $ 42,000, which is the permanent rise.
For this to happen, Ether will have to catch up with Bitcoin and regain momentum above $ 1,700 in the short term. For now, ETH is lagging behind Bitcoin as the ETH / BTC pair struggles to recover.
Whether ETH regains $ 1,700 as support area will likely be the main factor determining the path for the DeFi market for the foreseeable future.
Could Bitcoin Rise To An All-New High?
Boro Saxena, a retired investor and money manager, said that if bitcoin were to fall above $ 40,000 again, that would nullify the bearish scenario. He He said:
“Bitcoin is back over $ 40,000, and although it has yet to withdraw ATH, unlike the previous cycle, it hasn’t completely collapsed either. If $ BTC closes above its January high, that means my price action assessment was A mistake and the bulls were right. “
Heat exchange maps, especially Binance’s order book, show large sell walls at $ 41,000 and $ 42,000. As such, if Bitcoin recovers $ 40,000 and winds its way towards $ 41,000, it will confirm that the bullish market structure remains intact.
If Bitcoin regains strength given the DeFi index has not broken its parabolic structure, then a continuation of the rally is more likely than a sharp correction.
The DEFI so far looks like another pause in the long term trend. Breaking the curve would be alarming. pic.twitter.com/WfmNTnTOq4
– AliceCrypt February 7, 2021
Bluechip DeFi’s assets are already beginning to recover back to the daily opening on February 7, with AAVE, SNX and ALPHA showing strength.
It will be critical for the DeFi to recover beyond 2080 in the short term, however, to maintain the bullish market structure, which requires a 4% rally.