The Bitcoin (BTC) and Ethereum (ETH) price continued to increase this past week. Bitcoin had been trading above the $15,500 mark, however, its price has now dropped to around $15,000 at the time of writing. Ethereum is also down over 5% during the past 24 hours and trading at around $436 (at the time of writing).
A report from OKCoin notes that BTC managed to crack $15,500 for the first time in nearly three years. ETH had been rallying as well, though not as much as Bitcoin.
OKCoin’s report noted:
“As the price of bitcoin boomed this week, it was initially a tough week for the decentralized finance (DeFi) market. DeFi tokens fell by 10–30% across the board, before bouncing back strongly in the last 24 hours regaining most of the loss in the last week.”
During this past week, one of the worst DeFi performers was Yearn.finance’s YFI token, which fell by nearly 30%. YFI had been trading at about $7,500, but it’s currently trading at around $13,800. Uniswap (UNI), Compound (COMP), and several other major DeFi assets had also seen their prices drop significantly but are now making a recovery.
The report from OKCoin revealed that investors are “bullish on long-term prospects of the space, as evidenced by on-chain trends showing institutions accumulating DeFi tokens.”
The report added:
“The Ethereum ecosystem — from ETH itself to the DeFi space — got a notable fundamental boost this week when ETH2 developers released the deposit contract. This came after a researcher at the Ethereum Foundation said in an interview that he was worried that a delay of one to two months was going to take place.”
Despite the seemingly positive developments related to Ethereum, the average DeFi token value fell by around 75% (from their all-time highs) this past week, OKCoin confirmed in its report.
According to OKCoin:
“The issue is that as Bitcoin appreciates quickly, the air [gets] sucked out of altcoins, especially in DeFi.”
Ari Paul, Chief Information Officer and CEO at BlockTower Capital, stated that he does see some long-term buying opportunities in the current market. However, investors also need to consider the potential risk of yet another 60% drop in the value of DeFi tokens, Paul said:
Paul argued that since DeFi assets had rallied in a parabolic manner during H1 2020, a correction of as much 90% may be expected.
Qiao Wang, a former head of product at Messari, stated:
“Assuming BTC doesn’t moon anytime soon, a -50% nuke is more likely than a +50% from here for DeFi IMO. After that we can begin a 2017-style bull market for the quality DeFi assets.”