The Problem With The 2021 Bitcoin Bubble
How the DeFi Bubble Will Affect Bitcoin
DeFi tokens outperform bitcoin in recent weeks.
The subsequent correction in the DeFi segment will give an impetus to the growth of the BTC rate.
Decentralized finance bubble is inevitable.
The topic of decentralized finance known as DeFiDecentralized finance (DeFi) – this is financial services, built on blockchain technology, which offer users access to open, efficient and … More, has been actively replete with industry news headlines in recent weeks.
As of June 26, DeFi apps had $ 1.65 billion tokens, according to DeFiPulse. Back on June 15, this figure was $ 1 billion. Thus, the increase over this 11-day period was 65%.
At the same time, the quotes of tokens in this cryptocurrency sector are showing vigorous growth. Over the past three months, Bitcoin has risen in price by 80%, while DeFi tokens have shown an increase of more than 100% over the same period. Despite the still hazy situation around DeFi, analysts predict a powerful rally in the BTC rate that will occur as soon as this segment of the cryptocurrency market experiences the necessary correction..
DeFi as a bullish factor for Bitcoin
After rallying more than 150% from March lows, bitcoin is stuck in a range near the $ 9,000 level.Since early May, the leading digital currency has been trading in the $ 8,500- $ 10,000 channel, only slightly deviating from these levels..
The situation with DeFi tokens is somewhat different – they are noticeably ahead of BTC over the past few weeks, and as of June 26, six DeFi tokens entered the top ten of the top 100 cryptocurrencies in terms of growth.
But the main point is that the faster the current growth of these tokens, the more Bitcoin will benefit from their subsequent correction. The total value of all DeFi tokens now exceeds $ 6.5 billion, and a rollback of these coins even by 10-20% could entail an influx of millions of dollars into Bitcoin and Ethereum..
Bubble collapse is a matter of time
The recent surge in hype around the DeFi segment can be attributed to two trends: the support of blockchain-based financial projects by the Coinbase exchange and the launch of two new DeFi coins – Compound (COMP) and Balancer (BAL)..
Against the background of these events, hundreds of millions of dollars floated into these tokens and the corresponding protocols – speculators could not stay away from the hype, which actually masks one important fact – the growth of the decentralized finance segment is unlikely to be sustainable and stable..
As history shows, tokens mentioned or listed on Coinbase often roll back after the peak of the hype.
Research firm Weiss Crypto Ratings recently called DeFi’s growth “ludicrous” compared to the industry as a whole:
DeFi is one of the most exciting topics in the cryptocurrency world right now, but the idea of eliminating this segment from the rest of the market is ridiculous. This craze will eventually fizzle out and DeFi will trade just like the rest of the market..
It turns out that the only question is when exactly this correction will take place and how painful the fall of the currently thriving segment will be..
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