The DeFi sector is exploding higher today alongside the rest of the crypto market. Bitcoin is trying to break above its $16,000 resistance while the rest of the market also sees immense strength.
The price action seen throughout the past few days and weeks indicates that the recent lows seen by the blue-chip assets within this sector will mark long-term bottoms.
Many tokens are already trading well over 100% above their weekly lows. An example of this is Yearn.finance’s YFI token, which has been rocketing in value as of late.
Just one week ago, the cryptocurrency’s price nosedived to lows of $7,500. From here, it was able to rocket higher and hit highs of $18,000, which are being retested today.
These highs mark a resistance level for the cryptocurrency, but it appears to be on the cusp of shattering this. If firmly broken above, YFI could create a tailwind for other “blue-chip” DeFi assets and send them rocketing higher.
One prominent investor is now noting that the second wave of DeFi mania is here, noting that he expects things to continue heating up as investors begin moving to gain exposure to higher beta assets at a more rapid pace.
DeFi Sector Surges as Broader Crypto Market Shows Continued Signs of Strength
The tokens comprising the DeFi sector have witnessed immense inflows of capital throughout the past few days and weeks.
Just like all markets, capital inflows into DeFi take a top-down approach, first being siphoned into what are considered “blue chip” assets while then being directed towards smaller – higher risk – tokens within the sector.
Yearn.finance’s YFI, SNX, UNI, and Aave are all considered benchmarks of the decentralized finance ecosystem. Closely watching their price action will provide serious insights into where the entire sector might trend next.
Prominent Investor Calls for Second Wave of DeFi Hype to Return
While sharing his thoughts on where the sector might trend in the near-term, one prominent investor who manages a major crypto fund explained that he is now watching for a second wave of DeFi mania to arise.
“Many of the DeFi degens that disappeared from CT the past 2 months to catch up on sleep seem to have returned….and with a vengeance. That is the surest sign that we are heading into the next leg of the DeFi wave.”
For this to be a sustainable move higher, yields across the sector will have to rise in tandem with crypto-token prices, as that’s a lure for investors to enter the space.
Featured image from Unsplash. Pricing data from TradingView.