The “bipolar pattern” of the cryptocurrency market is becoming more and more distinct: on the one hand, the market trend is “steady”, and the price has always remained at 5 digits; on the other hand, most DeFi tokens continue to fall, out of a cliff-like decline.
According to data from Cocoa Finance, the well-known YFI has fallen from a historical high of $44,000 to around $16,000; Curve token CRV has fallen by more than 95% from its historical high. Not only that, after hovering around the US dollar for half a month, SUSHI finally fell below the US dollar mark on October 4, down 99.6% from its historical high.
Alex Krüge, an economist and market analyst who pays attention to Bitcoin and DeFi, believes that the DeFi market may be close to the bottom. In his opinion, DeFi tokens imitate the 2018 ICO market. However, unlike ICOs, these decentralized financial tokens have positive fundamentals, which may mean that they may be undervalued for a long time at current levels.
“In 2018, many ICO tokens plummeted 95% in one year. In 2020, some DeFi tokens fell 95% in one month. Most ICOs in 2018 were scams. In fact, many DeFi tokens in 2020 are From good projects, unfortunately, they have developed too fast in the frenetic speculative market. At present, the DeFi market may be close to the bottom, and it should experience a bull market with Bitcoin in 2021.”
The user data recently disclosed by the light wallet MetaMask indirectly confirms the above view of Alex Krüge. According to MetaMask, the wallet has more than 1 million monthly active users, an increase of more than 300% from December 2019. “Fundamentally speaking, the market is still bullish on DeFi.”
MetaMask pointed out that in the past 12 months, the significant growth of DAO and Web3 games, as well as the rapid adoption of DeFi products and services by consumers, has further accelerated user growth. It’s not just the ability of users to buy and store ETH to power our new growth phase. If you think about it, people don’t really want wallets. They want to invest, sell, lend, borrow. They hope to use websites such as Uniswap, desire, Curve, Maker and Aave to complete this work. “
Santiago Santos, a partner of ParaFi Capital, a cryptocurrency fund, recently mentioned this fact and hinted that other circumstances indicate that the DeFi market will grow further. Other factors he mentioned include: the strong growth in the supply of USD stablecoins and the rapid development of layer 2 scaling solutions.
