The Decentralized Economy, or DeFi Market, has undergone a sharp correction in the last 12 hours as Bitcoin (BTC) failed to break the $ 41,000 level.
Meanwhile, analysts say the profits from DeFi tokens are returning back to Bitcoin, although the DeFi market is still lagging behind despite the BTC recovery last week.
So what’s next for the DeFi market?
Both the large DeFi tokens and low market value cryptocurrencies have struggled to recover from bitcoin over the weekend.
Typical blue chip DeFi assets include Aave (AAVE), SushiSwap (SUSHI), Uniswap (UNI), Maker (MKR), Compound (COMP), and Synthetix (SNX).
Large DeFi tokens with slightly lower market value include Alpha Finance (ALPHA), Yearn.finance (YFI), and 0x (ZRX).
The main reason for the correction in the DeFi market is that profits from DeFi tokens have spilled over into Bitcoin as BTC began to decline.
This trend has intensified selling pressure on DeFi tokens, especially as the Bitcoin / Ether (ETH) pair has shown short-term weakness over the past two days.
However, the cryptocurrency market is evolving rapidly and as such, market dynamics could change rapidly in the next few days, especially with the launch of CME Ether futures contracts on Monday.
Meanwhile, another spike in DeFi could occur as the price of bitcoin surpasses $ 40,000 this time and merges between $ 41,000 and $ 42,000, which is a constant increase.
For this to happen, Ether must catch up with Bitcoin and gain over $ 1,700 in the short term. At the moment, ETH is lagging behind Bitcoin as the ETH / BTC pair struggles to recover.
If ETH returns $ 1,700 as a support zone, it will probably be the most important factor shaping the path to the DeFi market for the foreseeable future.
Could Bitcoin Rise to the Next Level?
Boro Saxena, a retired investor and money manager, said that if bitcoin falls above $ 40,000 again, it would rule out a bearish scenario. He said:
“Bitcoin is back over $ 40,000, and while it didn’t pull ATH, unlike the previous cycle, it didn’t crash completely either. If the BTC dollar closed above the January high, it means my price action was wrong. … ”
Heat transfer maps, especially the Binance order book, show large walls of sales at $ 41,000 and $ 42,000. Thus, if Bitcoin returns $ 40,000 and rises to $ 41,000, it will confirm that the bullish market structure remains unchanged.
If Bitcoin regains strength, given that the DeFi index has not broken its parabolic structure, it is more a continuation of the rally than a sharp correction.
Bluechip Defi’s assets are already starting to recover to their February 7 opening levels, with AAVE, SNX and ALPHA showing strength.
It will be critical for DeFi to recover from 2080 in the short term, but maintain a bullish market structure that calls for a 4% rally.