A marketwide selloff has accelerated and it appears that DeFi tokens are taking the biggest hits at the moment as many of them retreat further from their all-time highs.
Cryptocurrency markets have dumped around $20 billion over the past 24 hours in a fall back to around $315 billion according to TradingView, but it has not been the largest daily slump of the year.
Bitcoin’s 5% slide back to $10,400 has been the catalyst as usual, and the asset could fall even further when a platter of futures expire later this week. The closure of the CME gap could easily send prices back into the mid-$9,000 zone.
DeFi Tokens Tanking
Historically, when Bitcoin falls, the rest of the market hemorrhages and this has certainly been the case for a large number of DeFi tokens this week.
— Messari (@MessariCrypto) September 21, 2020
This appears to have been to the delight of a number of Bitcoin maximalists including BTC community member, Zack Voell (@zackvoell), who posted a screenshot of the bleed out;
DeFi market capitalization has been hit harder due to the rapid gains that most of these tokens have made over the past couple of months.
Analytics websites CoinMarketCap and CoinGecko currently report the market cap for the top DeFi tokens as being around $12 billion, or around 4% of the total for all digital assets.
DeFi TVL Falls From Record High
The total value locked across all DeFi platforms hit a record high of $13.2 billion last week according to analytics provider DeFi Pulse.
However, the platform has stated that there have been some problems with accurate reporting of the measure which has skewed the leaderboards:
We are aware of the issue in the info displayed on the DeFi Pulse leaderboard and are working dilligently to solve it.
Worry not, the sky is not falling and project's TVLs will be back to normal soon.
— DeFi Pulse
(@defipulse) September 21, 2020
At the time of press, TVL is being reported as $9.4 billion with Uniswap leading the pack commanding a market share of just over 20%. The chart does look a bit choppy and analysts have pointed out that TVL is not the best measure of a project’s performance since there are opportunities for double-counting with various liquidity pools.
DTC Capital head Spencer Noon [@spencernoon], pointed out that the move appears to be macro-driven and fundamentals for Bitcoin, Ethereum, and DeFi are all still solid;
Some will BTFD. Others will scale in. I expect both will be rewarded handsomely.
— Spencer Noon (@spencernoon) September 21, 2020
It’s important to keep in mind that market corrections are perfectly natural and should be expected after long periods of gains.