The coin of one of the largest DeFi projects, which is designed to optimize and improve the profitability of its users, set a new high at $38,887. As early as Saturday, YFI price was $17,979, showing growth prospects after a week of consolidation. At the same time, the number of locked dollars in the Yearn Finance project approached 1 billion, slowing down to around 967 million.
The wild growth of YFI is supported by increased volumes on the Binance exchange. We were observing these volumes during the previous two days.
Buy or wait?
In a few days we will know whether there are enough buyers left on the market who are ready to buy YFI at current prices. However, looking at the DeFi project prospects and the initial YFI price $800 in July this year – a positive scenario of continued growth after a short correction is quite likely.
Other market and DeFi space participants also have a positive view of the project. According to them, the capitalization of 1 billion dollars is not a superior limit. In his Twiter Tyler Reynolds shared the opinion that despite the potential competition, Yearn.finance is now in a very comfortable position for two reasons:
While others may emerge as competitors, $YFI is in such a powerful position because it 1) is the highest level aggregator of retail capital and 2) is a trusted brand by retail investors. We still don’t know what defensibility looks like in crypto, but this looks solid IMO.
Therefore, increasing the capitalization of YFI, according to Taylor, is a matter of time and new products of Yearn.finance.
Potential negative factors for Yearn.finance
As most DeFi projects use the Ethereum platform, Ethereum price fall in the market will jeopardize the provision of smart contracts. We will see how successfully DeFi projects adapt to local bearish moods during the next Ethereum correction.
YFI’s liquidity on major exchanges leaves something to be desired. In his tweet, crypto researcher Hasu wrote that $1000 is enough to change YFI price by 3%. At the same time, for another Defi coin LEND, $100,000 will affect only 0.2%.
We hope that this phenomenon is temporary. And it is associated only with the rapid development of Yearn.finance and the failure of the market to provide decent liquidity. Nevertheless, this factor means high volatility and the probability that the YFI price will return to $25,000 next week.
Charts courtesy of Trading View