Ethereum (ETH), the world’s largest smart contract platform, and major decentralized finance (DeFi) assets have dropped during the past week. However, DeFi-related infrastructure is getting a boost from Bitcoin (BTC), according to a report from OKCoin.
During the last week, top DeFi platforms such as Yearn.finance (YFI) and Aave (AAVE) faced moderate price corrections while some smaller-cap initiatives experienced strong gains.
The report from OKCoin noted:
“The fundamentals of the DeFi space continued to gain strength… The Ethereum 2.0 upgrade saw further support from users while individual protocols announced positive developments. The space also got a big boost with a group of developers launching a Bitcoin-focused DeFi platform to attract BTC holders.”
The report added:
“Ethereum is gaining interest as an institutional asset class, according to a Grayscale executive. ETH2 continued to gain traction this past week, with users continuing to deposit capital into the upgrade’s deposit contract.”
Ethereum is trading at around $557 at the time of writing, down from last week’s highs of a little over $600. Leading DeFi coins such as YFI, Uniswap’s UNI token, Ren Network’s REN, and Chainlink (LINK) are among the DeFi coins that were down by double digits this past week, the OKCoin report confirmed. It also mentioned that the only large-cap DeFi asset “spared” by the drop was Compound (COMP), which might be “benefiting from rumors” regarding a planned update to its protocol.
Qiao Wang, a prominent crypto analyst, stated:
“Recap of what I think happened. The mindshare of every informed alt player was on DeFi. But everyone was too afraid to buy on the way down. A game of chicken. Then everyone piled in at the first sign of strength. Today many are still in disbelief. But all mindshare is on DeFi. The liquidity in DeFi is simply not big enough to accommodate all of them. Hence the massive high-volume V-shaped recovery.”
Digital asset exchange Binance notes in a separate report that following last week’s all-time-high for BTC, this week marked a period of market correction for crypto-assets. Bitcoin had been trading above $19,000 for most of Saturday to Tuesday, which was right “before two major falls sent the price as low as $17,900 on Wednesday and then $17,640 on Friday, before closing the week at barely above $18,000,” the report from Binance confirmed. BTC is trading at over $18,300 at the time of writing.
The Binance crypto market report added:
“Most of the altcoin (alternative coins besides Bitcoin or BTC) market also reflected Bitcoin’s slight decline. Ethereum fell from $590 to as low as $570 on Saturday, before recapturing $600 on Sunday. After a sideways market for most of the week, Ethereum sank to $540 on Wednesday and ended the week at $550. Meanwhile, Binance Coin (BNB) was mostly at the $20 to $30 range to start the week, before dropping to as low as $26.80 on Friday before recovering to $27.30 to close the week.”
The cryptocurrency ecosystem’s total market cap ranged between $548 billion and $575 billion for most of the past week, before dropping as low as $520 billion on Friday (December 11, 2020), the report noted.
It’s worth noting that US Securities and Exchange (SEC) Commissioner Hester Peirce has recently commented on the nascent crypto and DeFi space.
“As this technology gains adoption outside and now inside the legacy financial system, we should figure out a way to embrace the personal liberty principles undergirding it. If we were instead to steamroll the technology’s liberty-enhancing features under the weight of regulation, we would lose a lot of the power of the new technology to afford opportunities to people whose autonomy has previously been curbed by, for example, limited access to the traditional financial system, geographic location, social standing, or subjection to a repressive government.”