Decentralized finance, DeFi, experienced incredible spikes throughout 2020. Unfortunately, DeFi, roaring in the summer, has been having a hard time lately. Assets such as Yearn.Finance (YFI), Uniswap (UNI) or Aave (LEND) are all at the helm and have seen serious declines in recent days.
However, despite the current decline, a keen-eyed trader warns that there is no “capitulation volume” to indicate that DeFi tokens are at a bottom. Here are the things you should pay attention to and this is the trader’s theory.
The total USD and Ethereum value locked in DeFi applications have a trajectory that matches Bitcoin’s parabolic climb in 2017. Numbers have increased from meager starts in early 2020, and recently rose to over $ 11 billion. The DeFi trend spread to everything else and improved the health and values of the entire crypto space.
Ethereum has benefited from these tokens that use the blockchain and require ETH gas fees to make transactions. The rest of the DeFi domain also suffered such a ripple, with a few tokens achieving four and five-digit ROI in the summer alone. Yearn.Finance (YFI) suddenly appeared and quadrupled its price per BTC. Uniswap was also offered via airdrop, although those who had Uniswap in the first place made serious profits, they are now making significant losses.
MetaMask, an Ethereum wallet used to connect to these DeFi applications and DEX protocols, also saw a similar increase in user growth.
What Will Happen in Aave (LEND)?
Few projects in decentralized finance have been as successful as Aave (LEND). Aave (LEND) is a perfect example of what a keen-eyed crypto trader says is a lack of “capitulation volume”. In the graph above, the parabolic curve has disappeared and Aave is already down over 60%. But the volume explains what will happen soon.