Analyst: Bitcoin’s 20% Surge Ruptured DeFi Boom, Projects Dive 20% or More

Tony "The Bull" Severino

4 years ago

3 mins read

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While Bitcoin was trading sideways, small-cap altcoins, decentralized oracles, and DeFi tokens were the stand out crypto market performers for several months.

However, as the first-ever cryptocurrency and Ethereum began pumping over the last week, DeFi projects were decimated. Has the latest rally in majors exposed decentralized finance projects as nothing more than hype?

Ethereum and Bitcoin Explode Through Resistance As the Crypto Market Catches Fire Again

The cryptocurrency market may have just begun a new uptrend after years of a bear market.

Bitcoin’s halving has passed, and some of the most important buy signals in the asset’s history have since triggered. All that was left, was for the leading cryptocurrency by market cap to break free from its sideways trading range and take out resistance at $10,000.

Yesterday, the top crypto asset did just that and surged sharply to as high as $11,400 at the rally’s current peak.

Ahead of Bitcoin’s breakout, major altcoins began surging, starting with Ethereum and XRP. Litecoin soon followed with an over 10% gain on the day. All three major crypto altcoins are up well over 15% on the month. Bitcoin did similar numbers just yesterday alone.

During the massive spike in Bitcoin and Ethereum, various altcoins that had previously captured most of the crypto market capital started to plummet.

Top projects like Chainlink, and various DeFi tokens that had prior to the move been the talk of the crypto industry, were suddenly correcting by 20% or more across the board.

This is due to what one crypto analyst and fund manager says is the two top crypto giants exposing the DeFi hype train for what it truly was: overhyped

0/ A small move in $BTC has already created ruptures in a number of speculative DeFi assets with some falling over 20% in a day. A further rotation of capital into $BTC and $ETH will likely expose some of the DeFi projects that are overhyped.

— Kelvin Koh (@SpartanBlack_1) July 27, 2020

DeFi Overhyped, Profits Rotate Out Of Budding Projects Into BTC and Major Altcoins

According to a former Goldman Sachs alum and partner at The Spartan Group – a crypto hedge fund – the “small” move in Bitcoin and Ethereum has exposed the DeFi boom as “overhyped.”

The analyst says that Compound sparked the initial DeFi capital rotation, thanks to yield farming and what they call the segment’s “eureka moment.” It caused a wild push for liquidity, which was achieved by “juicing returns” on farming.

Investors piled on as valuations and yields went up, not thinking about any potential risk associated with the projects. Hype has now caused valuations to outpace sustainable growth in the assets, and a correction is taking place.

Bitcoin & Ethereum Versus DeFi Tokens Comparison Chart | Source: TradingView

This could lead to a downward spiral effect, as investors dump the DeFi tokens when the trend fails to provide the profits that first drove them there.

Price charts of DeFi tokens compared to Bitcoin and Ethereum (pictured above) perfectly reflect this and show that the decentralized finance movement has a lot more growing up to do before valuations can withstand a pump from the top two cryptocurrency market powerhouses.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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