The Bitcoin course has shown enormous strength over the past 30 days. The Bitcoin price rose by 30 percent in October alone. While BTC is rising, the Decentralized Finance (DeFi) market looks deep red. The majority of the largest DeFi tokens such as YFI, UNI, COMP or UMA recorded enormously high percentage losses in October. Only Chainlink (LINK) and wBTC were able to buck the trend.
Decentralised Finance (DeFi): LINK and wBTC as winners
The DeFi market suffered particularly badly last October. Despite or rather because of the good performance of the Bitcoin price, many DeFi tokens were not able to grow at the same rate as BTC.
The positive exception to this downward trend, which we will look at in more detail in figures in a moment, does not apply to the three following crypto currencies: Chainlink (LINK), Wrapped Bitcoin (wBTC) and Maker (MKR).
The demand for synthetic BTC in particular has risen enormously in the past, with the result that the total market capitalisation of wBTC continued to grow strongly in October. The price increase of Bitcoin naturally also plays a role here. LINK also recorded a price increase of 13% in October.
Chainlink is also benefiting from the current performance of Bitcoin. The LINK share price rose by a good 12% in the last 24 hours.
UNI, YFI, COMP and UMA with deep red figures
However, if we look at the „classic“ DeFi tokens, we see deep red numbers. A massive price correction took place in October, affecting Yearn.Finance (YFI), Uniswap (UNI), Compound (COMP) and UMA (UMA) in particular.
In the period from 01.10 to 31.10 the share price development was as follows:
- YFI: $23,858 to $10,492
- UNI: $4.155 to $2.266
- COMP: $133.80 to $90.83
- UMA: $8,878 to $6,378
This shows that YFI and UNI in particular are among the losers in October. As a result, for many investors, market sentiment in the DeFi market has also been tilted. While sentiment was still bullish in the middle of the year, the bears took over in recent weeks.
However, the entire Decentralised Finance market should under no circumstances be written off. It is precisely such correction phases that are common in normal market cycles. Phases of excessive growth are followed by phases of consolidation and correction.
Thus, little has changed in the fundamentals of many DeFi projects. Rather, we are observing a so-called capital roll over effect, in which capital flows from the DeFi market in the direction of Bitcoin. The Bitcoin share price, which is currently strongly outperforming, will also undergo a phase of consolidation. As a result, it is likely that investors will then shift their capital back towards the DeFi token.