Major correction for DeFi as Bitcoin rejected again above $40K: What’s next?

Major correction for DeFi as Bitcoin rejected again above $40K: What’s next? 1

Major correction for DeFi as Bitcoin rejected again above $40K: What’s next? 2

The decentralized financial market or DeFi market has seen a sharp correction over the past 12 hours, with Bitcoin (BTC) failing to break through the $41,000 level.

Meanwhile, analysts say gains in DeFi’s major tokens are returning to Bitcoin, although the DeFi market is still lagging despite BTC’s rally last week.

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http://server.digimetriq.com/wp-content/uploads/2021/02/Major-correction-for-DeFi-as-Bitcoin-rejected-again-above-40K.png

DeFi (Binance) candle index at 1 hour. Source: TradingView.com

What is the next step for the DeFi market ?

Major blue-chip DeFi and smaller cryptocurrencies on the market both rose against Bitcoin over the weekend.

Typical DeFi blue chip values are Aave (AAVE), SushiSwap (SUSHI), Uniswap (UNI), Maker (MKR), Compound (COMP) and Synthetix (SNX).

The largest DeFi markers with slightly lower market capitalization are 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 flowed into Bitcoin as BTC began to retreat.

This trend has put pressure onFi chip sales, especially as the Bitcoin/Ether (ETH) pair has experienced short-term weakness over the past two days.

However, the cryptocurrency market is evolving rapidly, so market dynamics could change rapidly in the coming days, especially with the launch of CME ether futures contracts on Monday.

At the same time, a new DeFi rally could be underway, as the price of Bitcoin has clearly passed the $40,000 mark this time and is consolidating between $41,000 and $42,000, which is an all-time record.

To do so, Ether must overtake Bitcoin and cross the $1,700 mark in the near term. Currently, ETH is lagging behind Bitcoin and the ETH/BTC pair is struggling to recover.

The fact that ETH is recovering the $1,700 support zone will likely be a major factor determining the market price of FiFi for the foreseeable future.

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http://server.digimetriq.com/wp-content/uploads/2021/02/1612696324_397_Major-correction-for-DeFi-as-Bitcoin-rejected-again-above-40K.png

Chart of ETH/BTC 1-hour candlestick prices (Binance). Source: TradingView.com

Can Bitcoin set a new record?

Puru Saxena, a retired investor and manager, said that if Bitcoin returns above $40,000, this would negate the bearish scenario. He said:

“Bitcoin is back above $40,000 and still hasn’t released its ATH, unlike the previous cycle, but it hasn’t completely broken either. If $BTC closes above its January high, it means my estimate of price action was FALSE and the bulls were right.”

The heat maps of the exchanges, especially Binance’s order book, show large selling walls at $41,000 and $42,000, so if Bitcoin recovers $40,000 and works its way up to $41,000, it will confirm that the bull market structure remains intact.

If Bitcoin were to recover, and given that the DeFi index has not broken its parabolic pattern, another recovery is more likely than a sharp correction.

So far, the DEFI appears to be another break in the long-term trend. A break in the curve would be worrisome. pic.twitter.com/WfmNTnTOq4

– Alice (@AliceCrypt) February 7, 2021

Shares of Bluechip DeFi have already begun a recovery at the daily open on February 7, with AAVE, SNX and ALPHA in strength.

However, for the DeFi index to recover in the near term after 2080, it is essential to maintain the bullish structure of the market, which would require a 4% increase.

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