DeFi tokens hit hard by bitcoin selloff

The decentralized finance (DeFi) sector has been one of the driving forces behind the cryptocurrency market this year, and projects like Yearn.finance (YFI), Aave (AAVE) and Uniswap (UNI) have quickly risen to blue-chip status.
But the old adage says, "Markets go up like an escalator and go down like an elevator," and given the volatile nature of the cryptocurrency market, the elevator seems to be in free fall. DeFi tokens have dropped at least 60% on average from their recent all-time highs, and the cryptocurrency market itself has lost more than $ 1.2 trillion in less than two weeks.

DeFi tokens hit hard by bitcoin selloff

The pullback saw the value of assets on hold (TVL) across all DeFi platforms plummeted from a record high of $ 164.2 billion as of May 10 to its current value of $ 93.34 billion. Most of the value blocked in DeFi protocols depends on the rate of its own tokens in combination with deposits in BTC and ETH. Thus, the market downturn has led to a sharp drop in the overall TVL, which is further exacerbated by the traders themselves, withdrawing funds in an attempt to fix balances.
Evidence of the exit speed is the surge in activity on the leading decentralized exchanges (DEXs) on the Ethereum network. According to Dune Analytics, on one day, DEX volumes accounted for 10% of their 2020 total.
Overall, the total market capitalization of altcoins fell more than 50% from a record high of $ 1.48 billion (May 11) to a low of $ 705 million. New traders are now facing a major market pullback for the first time, and bitcoin skeptics Paul Krugman and Nouriel Roubini have raised their heads once again.
On the other hand, aggressive buying during the downturn by some of the largest bitcoin holders hints that the market may not be in a bursting bubble, but in a deflation phase that will allow it to rebuild after a rapid growth.
FX24

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