DeFi tokens fell by 50-98% in two months. Which coins should traders buy
Decentralized financing (DeFi) has become a phenomenon in 2020 in the cryptocurrency market. Tokens related to it have shown growth of hundreds and thousands of percent in a short time. The most striking example is the YFI coin. It was released in July and in September it has risen in price by more than 130,000%, from $ 32 to $ 44,000. Now the price has dropped below $ 13,000.
The case not only affected YFI, in September the situation in the entire DeFi market changed. Tokens quickly began to fall in price, at present even the most popular representatives of this sphere have lost 50 percent or more of their value. In some cases, the decline has exceeded 90%.
One of the reasons for this decline is probably the overheating of the market. Almost all DeFi tokens appeared last spring, and in the summer they broke into the top 100 cryptocurrency ratings through capitalization. Now the tension has dropped and the price has dropped.
Another reason may be the price increase on bitcoin. In September, interest rates fell to $ 10,000, but then began to grow again, rising by 31% during this period, to the current level of $ 13,100. Maybe traders started taking profits on DeFi tokens and transferring capital to BTC.
Despite such a sharp drop in the price of DeFi tokens, it is still too early to buy them, says Fedor Anashenkov, an analyst at United Traders. He explained that now trade attention has shifted to bitcoin and other popular currencies, "everyone is waiting for the rally." In addition, the DeFi market was severely overvalued due to hype, and as soon as capital began to fall, prices collapsed.
“I would not recommend buying DeFi tokens right now, but looking at them for the future. We have to wait until the search for a new price level is over and look closely at coins where there is no inflation, such as MKR, and avoid algorithmic stack coins like Compound, Balancer, Curve, Maker, says the expert.
The founder of the stable cryptocurrency platform STASIS, Grigory Klumov, does not agree with him, according to which DeFi tokens are now in a cycle to complete the correction, and the current decline and distraction of traders through the growth of Bitcoin is an opportunity to profitably buy assets .
“There is a lot of hot capital in cryptocurrencies that are looking for quick returns and flowing from one popular token to another. Therefore, the current shift of such players' attention to bitcoin makes it possible to buy DeFi at attractive prices, says Klumov.
Those who want to take a chance, he suggested to take a closer look at the depreciated "blue chips" in the DeFi sector. Klumov referred to them tokens AAVE, FRONT, REN, FLAMINGO, LOOPRING and XVS.
On October 28, YFI developer André Cronier released a new token – KP3R. In a matter of hours, the rate rose by more than 15,000%, from $ 1.4 to $ 220. As of this writing, the price has dropped to $ 146. Users have already invested $ 6.8 million in the asset.
In mid-September, the former product manager at research firm Messari Qiao called Wia DeFi tokens "the investment opportunity of the decade." He thinks not taking the chance is like not buying Bitcoin in 2013 or Ethereum in 2015, even though there is a lot of rubbish in the industry.
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