Top DeFi coins — Chainlink, Sushi, Band, and others — face severe drop

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It’s been a tough past week for the crypto market, with coins from Bitcoin to the smallest altcoins plunging lower. The drop has been pinned to a number of factors:

  • A bounce in the value of the U.S. dollar, which has compressed the value of foreign currencies, gold and BTC included.
  • An influx of miner Bitcoin being sent to exchanges.
  • Slow movement on the stimulus front in the U.S.

While Bitcoin in and of itself has dropped around 20 percent in the past week as per CryptoSlate data, it’s been a much worse week for decentralized finance (DeFi) altcoins.

Strong crash in Ethereum-based DeFi coins

From their local highs set last Monday and Tuesday, leading DeFi coins — a list that includes names like Chainlink (LINK), Band Protocol (BAND), Sushi (SUSHI), Aave’s LEND, and more —  have plunged 30 to 50 percent.

The extreme weakness in the DeFi market has been attributed to a number of factors.

First and foremost, trader Qiao Wang noted that the crash of Sushi, SushiSwap’s native governance token, might be causing a collapse in DeFi:

“Sushi hurt so many DeFi faithful and could mark the beginning of a DeFi mini-winter. But a mini-winter is exactly what we need. Cool down, focus on building real products, and prepare for the next wave.”

For those unaware, a co-founder of the protocol made away with 38,000 ETH when he promised not to sell or cash out any of the coins he was allocated.

Ari Paul, the founder of BlockTower Capital

, opined that the strong correction is simply a byproduct of parabolic trends and their subsequent retracements:

“A basic trading rule is that when true parabolic advances break, you don’t look to buy until most of the parabolic move is reversed. In BTC tops, that’s meant waiting for 75%+ dips. In alts, 85%+. BTC had a clear parabola in 2017. A less clear one in 2019. Defi just had one burst.

On the up from here

Investors are confident that the worse is over for the DeFi market, or at least that the long-term trend of this segment of the crypto market remains skewed to growth.

Alex Krüger, on his personal Twitter account, wrote that he’s “confident alts bottomed,” citing the absolute capitulation seen in this segment of the market over the past three days:

“Market experienced an Alts Apocalypse. Won’t happen again even if $BTC were to go down. $BTC down 5% with alts down 20-50% was extraordinary. Multiplier is usually in the 1.5-3x, not 4-10x.”

Speaking on the long-term outlook for the DeFi market, Qiao Wang argued that there remains a large amount of growth potential in these cryptocurrencies because “old-school BTC/ETH killers” still have extremely high valuations.

Many believe that the capital in these blockchains — be that Bitcoin Cash, Tron, etc. — will be funneled into BTC, ETH, and DeFi over the coming market cycle as these blockchains continue to hold their dominance.

The post Top DeFi coins — Chainlink, Sushi, Band, and others — face severe drop appeared first on CryptoSlate.



Source: Top DeFi coins — Chainlink, Sushi, Band, and others — face severe drop

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