The co-founder of encrypted data aggregator Markets Science and Twitter user’Bitdealer’ shared a graph showing that 11 top DeFi tokens have a negative correlation with BTC in the past 45 days as of November 1st. AAVE has a moderate correlation, and the correlation with UNI tokens is less than 0.1.
Although Ethereum powers most of the DeFi ecosystem, 7 out of 13 DeFi tokens are negatively correlated with Ethereum (ETH).
Many decentralized finance (DeFi) tokens are in trouble this week, and the price of Bitcoin (BTC) has soared. Analysts found that the negative correlation between DeFi tokens and BTC lasted longer.
Correlation between BTC price performance and 13 top DeFi tokens in 45 days: Bitdealer
However, the DeFi field began a period of speculative stagnation at the end of August. As of this writing, Binance’s DEFI composite index fell from $1,100 in early September to below $400, a 64% drop.
TokenSet’s DeFi Pulse Index (DPI) has also fallen by more than half since its launch at a price of $130 in mid-September. The latest transaction price of DPI tokens is only $61.55.
At the same time, the price of Bitcoin has risen by more than one-third in the past month. After the global payment giant PayPal announced its entry into the cryptocurrency field, Bitcoin rose to $14,000 at the end of October.
Google Payments engineer Tyler Reynolds believes that bullish behavior in the Bitcoin market is attracting speculative capital in DeFi, and he pointed out that “major DeFi investors” including Three Arrows Capital and Qiao Wang have recently “turned their attention to BTC.” “Reynolds estimates that as much as $50 million in funds may have flowed out of the DeFi market, thereby reducing buyer pressure in the market.
The cryptocurrency trader Flood also expressed a similar view on the Coinist podcast. He said, “In this rise, Bitcoin exposure is not as much as I thought. I think this represents the entire market.”
The trading activities of decentralized exchanges (DEX) seem to have also reversed. From September to October, the monthly trading volume of DEX dropped from nearly $26.3 billion to approximately $19.4 billion.
The trading volume of a few DEX accounts for a large share in the DeFi field. Uniswap and Curve accounted for 75% of the total trading volume in September. Since November 2019, Uniswap trading volume accounted for 45% of the total DEX trading volume in the past three months.
DEX monthly trading volume: Dune Analytics
