The frantic rebound of the DeFi composite index price pleasantly surprised all investors and us! Without giving hope for life a week ago, now the DeFi market has grown by almost 70%. Trading volumes increased significantly compared to the fall without volumes in September 2020. In the previous article we expected a price rebound to the range $412-437.
Previously, the interest of buyers in the form of increased volumes was not recorded. However, as you can see after a while, the index price very aggressively approached the range of the previous low:
This nature of the price movement, confirmed by increased volumes, was the first signal to continue the sharp rebound. On 6 November, the local trend line of the falling channel, which is also the middle line of the global falling channel, was broken. From this moment there is a noticeable price slowdown on the chart. Sellers concentrated their efforts in the range $555-575. It confirms the sharp rebound of the index price on 7 November and the change in the nature of growth.
Given the last attempt of buyers to fix above this range, it is noticeable that sellers are weakening. Most likely buyers will be able to capture this range. Though, we should not forget that the price has not yet left the global falling channel, which we see in the daily timeframe:
Therefore, despite the strong growth trend, the DeFi composite index price is approaching a potential turning point. To continue the growth trend, buyers need to keep $423. This is a critical point and the worst case scenario. It can occur if BTC correction starts.
Briefly about the DeFi composite index components
In the previous article, we provided a table of subsidence statistics for each token included in the Defi composite index. As we have witnessed a serious contrast in the market, we want to continue this table:
This time we decided to add cheerfulness to the statistics and divided the DeFi composite index tokens into categories:
- Yellow are volatile tokens, which sharply fell since 24 October, but strongly grew since 5 November. Their total weight in the index is 36.56%.
- Red are weak tokens that sharply fell and poorly grew. Their weight in the index is 18.73%.
- Green are stable tokens that fell and grew moderately. Their weight is 36.04%.
- Purple are strong tokens that showed a relatively weak fall and strong growth. Their weight is 8.67%.
As we can see, the main leaders of the fall, such as YFI, UNI, YFII, rehabilitated and breathed life into the Defi composite index. The CRV proved to be the best in a month, giving serious hopes for the emergence of a strong growth trend.