Market data shows that the number of collateralized assets in DeFi suddenly increased from $10.9 billion to $12.2 billion in only two days. If Ethereum successfully regains this price level as support, the entire market might resume this year’s exponential rise.
According to DeFi Pulse, the number of total value locked (TVL) in DeFi increased by almost $2 billion in only two days. At the same time, we see a sudden rise today in the price of Ethereum as the asset jumped from $395 to almost $420. These two aspects might indicate that the interest in DeFi-based services and products have been renewed.
We had the chance to see a gigantic move being pulled by Bitcoin this week. Unexpected for even the best of traders, the leading cryptocurrency showed strength by increasing more than $1000 in only one week. Bulls have aggressively pushed the price up and liquidated all bearish traders. However, it remains to be seen whether this move was impulsive or organic.
Whatever may be the reason, reclaiming this price range is important not only for Bitcoin but for the rest of the market as well. In the last 30 days, we saw the DeFi market stagnate as participants lost their interest.
Since September 28, users did not lock more than $11.26 in collateralized assets. In fact, the TVL even dropped on multiple occasions in the past month. We encountered more resistance once again last week when the TVL metric simply could not surpass the $11.5 billion.
Where might Ethereum and DeFi go next?
At one point, it almost seemed as if DeFi and Ethereum had the chance to ‘die’ as a result of Bitcoin showing its dominance. Losing almost a billion in collateral at the start of the week, the tide unexpectedly turned on Thursday as the market now hosts exactly $12.3 billion in locked assets.
This shift of perspective was most likely helped by the fact that Bitcoin effectively ranged during the day. This price action enabled alts to recover and finally take their own share of the surging market.
Naturally, the implications of this move are that the DeFi sector is ready for another leg up. It is now entirely possible that the market resumes its exponential rise this year after only ranging for two months. However, the fate of this sector relies on how Bitcoin may react next.
One bearish and two bullish options
For alts, it would be best if the largest cryptocurrency found support at any price level above $12,000. Additionally, it would also help if Bitcoin ranged for some time so that profits could flow down into lower market cap projects.
While structurally bullish, a more bearish option would be that Bitcoin pushes towards higher price levels. By doing so, it would finally show that the bear market is finally over and that green candles are here to stay. While this aggressive move would temporarily stop the progress of most altcoins, it would still ensure their recovery at a later point.
The third and ultimately bearish case is that Bitcoin’s recent market movement was impulsive. There is a high possibility that whales sought to ‘exit the market.
The obvious way to do so is by looking for liquidity at higher prices. In this context, Bitcoin would fall back to $10,000 if not lower and bring the entire altcoin market down. Decentralized finance would definitely lose its ground for numerous months if this were to happen. But whatever happens, luck is on the side of DeFi as we have two out of three positive outcomes.
Marko is a content writer passionate about cryptocurrencies, blockchain technology, geopolitics, and information security. After an internship at Cointelegraph in 2018, he decided to pursue writing about the field of decentralized technology full-time.
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