The DeFi sector’s growth since the beginning of 2021 inspires great optimism about the future of this ecosystem.
The overall growth dynamics of the DeFi tokens market is perfectly reflected in the DeFi composite index, which has grown by more than 200% in 2 months.
Buyers managed to cope with the main problem – the range of $700-740. The test of this range on 11 January showed buyers’ strength and became the starting point of a new powerful growth wave.
In fact, the DeFi composite index price is moving in a clear growth channel for a month. The last local price correction within this channel was on 22 January, after an attempt by buyers to fix above the mark of $1156. This mark was the target of our previous article.
DeFi Composite Index Price Growth Fades
The new wave of growth began on 22 January and has been going on for 20 days. The price is moving near the channel upper trend line and buyers are trying to accelerate the index growth. However, is the DeFi market strong enough at the moment?
The last 4 candles in the daily timeframe do not look as confident as in the period from 3 to 6 February. Buyers managed to update the all-time high, but after that, the price did not continue to grow aggressively.
The chart shows a noticeable price slowdown, which may lead to the beginning of the correction within this channel. The maximum growth target for the DeFi composite index is in the range of $2600-2700.
This scenario will be possible if BTC buyers find the strength to continue to grow and test the mark of $50,000. The critical point of the current growth wave is in the range of $2115-2160:
DCI Price Correction Eyes $1740
If sellers manage to take control of this range, we will expect the index price to fall to $1740.
Analyzing the effect of the Defi tokens on the DeFi composite index, we can see that the weight of tokens included in the index has significantly changed.
For example, the Link weight decreased to 12.54% and its impact was almost equal to such tokens as UNI (10.41%) and AAVE (7.59%).
The fact that the index weight is more likely to be distributed among the Defi tokens will make it possible to show the exact average value of the DeFi market.
If, for example, CRV from 1 January to the present has made 507% of the price growth, and Link only 146%, the average price due to a small difference in the weight of the token will be fair.