Has the DeFi Bubble Burst? Market Cap Plunges 25% in 24 hours

Has the DeFi bubble burst? The overall market cap of DeFi tokens has dropped by 25% in the last 24 hours. What is more, their corresponding daily trading volumes have declined by 30%.

October 8, 2020 | AtoZ Markets – Market data company Santiment, has revealed that the decentralized finance sector (DeFi) suffered a major loss yesterday.

“The crypto market has been engulfed in a sea of red this week, with most DeFi blue chips recording double digit losses over the past 7 days.”

DeFi market cap declined 25%

In particular, according to the data provided by the resource, the market capitalization posted a 25% decline yesterday. Furthermore, the resource has reported through a blog post this fall was accompanied by a 30% drop in the trading volumes of DeFi tokens.

Notably, the most affected DeFi tokens are Sushi (SUSHI), Uniswap (UNI), and Yearn Finance (YFI) after suffering weekly losses of 51%, 38%, and 31%, respectively. While many have already predicted the end of the DeFi experiment, Santiment claims these declines may be related to "whale accumulation" around several DeFi assets, including Synthetix (SNX).

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Has the DeFi bubble burst?

With such high double-digit losses, one might easily conclude that the DeFi bubble has burst and a huge number of these tokens might just disappear into oblivion.

Read also: DeFi Search Surges in China as Exchanges Lose Liquidity

Nevertheless, crypto analyst Andrew Kang believes that the DeFi market is in the initial stages of a market cycle. This stage is marked by a first market sell-off and a subsequent bear trap. The following tweet and accompanying chart of the DeFi market cycle show Kang's analysis of the DeFi market.

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