The co-founder of crypto data aggregator Markets Science, Twitter user ‘Bitdealer’, shared a chart showing a negative correlation between the top 11 DeFi tokens and BTC over the past 45 days. until November 1, with AAVE showing a neutral correlation and UNI displaying confluence if less than 0.1.
Seven out of 13 DeFi tokens were also found to have a negative correlation with Ethereum (ETH), even though Ethereum powers the majority of the DeFi ecosystem.
With many decentralized financial tokens (DeFi) struggling while Bitcoin (BTC) is bullish this week, analysts have identified a longer negative correlation between DeFi tokens and BTC. .
The sector, however, found speculative stability towards the end of August, with Binance’s DEFI Composite Index falling 64% from $ 1,100 in early September to below $ 400 at the moment.
TokenSet’s DeFi Pulse Index (DPI) Index has also more than halved in value since its launch at $ 130 in mid-September. DPI tokens last traded for just $ 61.55.
Meanwhile, the price of Bitcoin has risen by more than a third in the past month, reaching $ 14,000 at the end of October after global payments giant PayPal announced it will enter the cryptocurrency sector.
Google payments engineer Tyler Reynolds believes that Bitcoin bull market price action is withdrawing speculative capital from DeFi, noting that “major DeFi players” including Three Arrows Capital and Qiao Wang recently pushed “Narrative of a tough turnaround into BTC”. Reynolds estimates up to $ 50 million may have left the DeFi market, weakening buyer pressure in the market.
Crypto trader Flood made a similar stance on the Coinist Podcast, saying that he doesn’t have “as much exposure as I would like on this move and I think it represents the market as a whole.”
Trade activity on decentralized exchanges (DEXs) appears to have also reversed, with monthly DEX volumes falling from nearly $ 26.3 billion in September to around $ 19.4 billion last month. .
Only a handful of DEXs have a substantial share of the industry’s volume, with Uniswap and Curve representing 75% of decentralized trading in September. from November 2019.