- The popularity of decentralized finance (DeFi) skyrocketed in 2020.
- Dozens of DeFi projects were created in the past few months, with some of them reaching more than $1 billion in market capitalization.
- The growth of the DeFi ecosystem is slowing down after many prominent projects have crashed.
Although many analysts agree that DeFi will continue to grow in the future, the recent explosion in new projects without any substantial use-cases hasn't helped the industry. Most of the current DeFi projects simply focus on yield farming, a model that involves users earning token rewards by holding other tokens or providing liquidity.
According to recent statistics from newsbtc, more than $9 billion in cryptocurrencies were locked in DeFi protocols, at one point. Perhaps, the most popular DeFi project, or rather, the first to start the trend was Compound. This project got immediately listed on Coinbase and FTX, and eventually, Binance. COMP quickly reached a $900 million market capitalization peaking at $353 before rapidly falling to a current low of $105.
However, if the current DeFi space can start shifting towards a more sustainable industry, users will benefit significantly while minimizing their risk. Just recently, the biggest exchange in the world, Binance, announced Launchpool, a new and secure way to farm new assets. Changpeng Zhao, CEO of Binance, stated that he expects DeFi to be a huge part of Binance.
Finder released a report talking about cryptocurrency predictions in 2020 and DeFi. The article stated:
Many of our panelists note DeFi will play a pivotal role in the success (or failure) of Ethereum, and so we asked about their outlook on DeFi for the year ahead. The majority of panelists (64%) expect DeFi applications to steadily grow in both value locked and user count over the next 12 months.
The rise and fall of SUSHI
Another popular DeFi project that plummeted is Sushiswap, a fork of the Uniswap exchange. The website's main idea is to provide additional features like increased rewards for network participants and its own token, SUSHI.
SUSHI's price quickly peaked at $10.44, reaching a $260 million market capitalization; however, the rally was short-lived as the token is currently trading at $0.61.
SUSHI/USDT 4-hour chart
Things aren't looking too great for SUSHI. The downtrend is massive on the 4-hour chart, especially after losing a crucial support level formed at $1.2. The RSI is currently too overextended but shows no signs of recovery just yet. The MACD has been bearish since the loss of $1.2.
The current price of SUSHI is $0.62 and can continue falling further as there are no precise support levels on the way down. Without support levels, SUSHI can easily fall below the last low at $0.55 into $0.50.
SUSHI New Addresses Chart
The digital asset is attempting to bounce from $0.55, a low established on October 7, a few hours ago. Looking at the chart with new addresses joining the network, we can observe a spike from 269 yesterday to 368 addresses now. This could indicate that investors are ready to buy the dip and perhaps push SUSHI up to $0.7 in the short-term.
YFI price confirms a head and shoulders pattern
Unfortunately for YFI holders, the digital asset formed a head and shoulders pattern on the daily chart, which has seen a bearish breakout and continuation.
YFI/USDT daily chart
The support level was formed at around $21,100 and was broken on October 3. Despite the selling pressure, the RSI has not yet touched oversold levels, which means the digital asset could continue to fall to $12,200.
YFI New Addresses Chart
The chart with new addresses shows a decline in this number since September 29. On October 4, 1,000 addresses were joining the network; there are only 476 now. This shows a loss of interest in YFI from new investors.
YFI IOMAP Chart
On the other hand, the In/Out of the Money Around Price by IntoTheBlock shows a massive support area between $14,873 and $15,299, where 164 YFI were bought. In comparison, the range of $15,341 - $17,171, only 67 YFI coins were purchased.
If bulls can defend this massive support area, we could see YFI re-test the previous support level at $21,100. The TD sequential indicator also has presented a buy signal on the 4-hour chart.
YFI/USDT 4-hour chart
Uniswap's newest token trying to survive
In response to an attack by SUSHI to migrate close to $1.3 billion liquidity from Uniswap to SushiSwap, the exchange released its own new token called UNI. It was airdropped to anyone that previously used the exchange for free.
UNI/USDT Daily chart
On the daily chart, the TD sequential indicator has presented a buy signal on October 6, but the downtrend remains intact. On the shorter time-frames like the 4-hour chart, UNI is currently trying to bounce back up from a low established at $2.47.
UNI/USDT 4-hour chart
The TD indicator also presented a buy signal on the 4-hour chart; however, it was invalidated after a bearish breakout. Nonetheless, some on-chain metrics are shifting in favor of the digital asset.
UNI New Addresses Chart
For instance, the number of new addresses joining the network has been in an uptrend since October 3, from 1,700 to 2,080 currently.
On the other hand, the strong downtrend that UNI is facing could easily continue as there are no good support levels on the way down. The next price target of the bears would be the low at $2.47 and then $2.4.