The DeFi Hype is going on like forever, people made as well as lost a lot of fortune amidst this craze, but there is a catch, which, most of us may have been missing out already...
Hordes of retail investors have been lured into the DeFi sector by the massive gains posted by many of the crypto assets residing within this fragment.
As the multi year bear market is coming to an end, crypto traders are turning to unconventional ways of getting multifold returns, by leveraging decentralised exchanges, especially Uniswap, to trade a plethora of different ERC-20 tokens with micro market caps, causing many of them to see surges of 10x, 20x or even more.
Read the whole story to understand, what we are missing out.
A disclaimer, like usual:
I'm not a certified financial advisor, and even though I've been trading for quite a few years, I urge people reading this, and my other posts to #DYOR (Do your own research) before taking any decisions!
Of course I'm going to help you out if you have some queries/doubts, so feel free to let me know in the comments, or on Twitter :)
List of the top 10 DeFi coins:
Data extracted from Coinmarketcap, Defimarketcap, and manually from Tradingview.
*Ampleforth: Have a look at this article, why to look at the Mcap instead of price.
Here are the charts of the 10 coins, for reference:
Maker: https://www.tradingview.com/x/Y8xyAfuM/
Compound: https://www.tradingview.com/x/83wfppp5/
Synthetix: https://www.tradingview.com/x/ciLPJLaB/
Lend: https://www.tradingview.com/x/Wa7s0wwU/
Kyber: https://www.tradingview.com/x/YHWoeEI5/
0x Protocol: https://www.tradingview.com/x/lOThfNCb/
Ampleforth: https://www.tradingview.com/x/13xcZrZf/
Balancer: https://www.tradingview.com/x/vxvFea3m/
Loopring: https://www.tradingview.com/x/eE4yCVVN/
Bancor: https://www.tradingview.com/x/T1OMz7pS/
Looking at this data, we can be in disbelief, especially because some coins delivered as high as 3000-4000% returns in matter of just a few months.
But, wait,
Now comes the real disbelief.
One ERC-20 – named “Retard Token” (TARD) – posted a 20x return, with investors pouring in money due to its “meme potential.”
Then there was a brief trend spreading on the decentralized token trading platform Uniswap: creating new versions of hyped DeFi token ampleforth (AMPL), which gave rise to Antiample, Pro Ampl, Antiample Tendies, and so on. More on this here All these tokens pumped up more than 10x, inspite of being of no real world use.
Now here are a few scams:
Decentralized derivatives project Opium took to Twitter on July 7 to warn users that a scam token called Opium and trading under the ticker OPM had been listed on Uniswap despite the project not having a native token.
Source: Cointelegraph
Now I'm not covering much of these, as covering every scam will be well beyond the scope of this article, when, it's fully understood that just anyone can create a new token and list it on uniswap.
(Yeah, even I can create a new scam token called PumpDefi, and tell that if defi market goes up, this coin will pump 100x) and so on...This is just one of the many shitty ideas.
Disclaimer: I do have a lot of solid ideas lol, but I'm not telling them here 😂)
So let's have a look at the Uniswap data:
Data source: Uniswap
Crypto traders on uniswap right now are throwing money into just about any small token, so let's now have a look at the most popular chart to measure the Altseason!
Want to see some crazy charts?
490304% in a few days LOL. Any words?
Want more?
Check out YFI, Nest Protocol, Rarible, Donut, Auctus, Meter, Cream Finance, Uptrennd, Aleph.im, Tendies, and the list goes on and on ... !!
Even the dumbest scam coins on uniswap pumped up at least once.
Most of the so called tokens which are giving crazy gains of 20x, 100x, 200x, are on uniswap, and are traded on Dexes, like Uniswap, an just like shitcoins, most of these tokens don't serve any real world utility. But again, I can still say, there are a few gems :)
Here comes a catch:
Have a look at the charts:
Chart: Bitcoin Dominance, 1W
link: https://www.tradingview.com/x/BpsBYqJn/
Did you notice how "Small" this altseason is, when it compares to the actual capital outflow from Bitcoin into Altcoins, measured in terms of the Bitcoin dominance?
Point to consider:
The first true altseason, which was back in the good old days of 2017 created a nearly 63% drop in the Bitcoin dominance from an all time high.
This DeFi hyped altseason only created a drop of 12% so far!
If you are still wondering out why it's strange, I'll tell you a couple of reasons
- Most of the altseason is on microcaps, which aren't actually creating any capital outflows from Bitcoin.
- Most of the altseason is triggered by Uniswap tokens, which are ERC20 tokens, so basically, capital is flowing from ETH into these tokens.
If you understood about the dominance chart, and why it's probably not going down as expected, it means, you are basically trading ETH with these coins, which isn't affecting the BTC Dominance that much!
So capital isn't really flowing from Bitcoin to Altcoins, but rather, in between altcoins, and mostly from ETH to these coins and vice versa.
I think we should need an ETH/ERC20 market cap dominance chart soon!
Sentiments in this market feel very similar to that of the 2017 Alt market euphoria, but I'm pretty sure it's on the scale of ETH dominance, vs the DeFi coins on uniswap. (Refer to the uniswap data posted above)
Also, as I mentioned before, only microcaps are getting pumped up like crazy, which means, mostly elites with insider info are leveraging this to get some cash out of the market.
Even though I know a complete newbie who made nearly $2 million, out of sheer luck, on buying some random shit token from Uniswap, which went up some 10000% in a few days. (I wish I was that person :P)
I'd like to bring to your attention that something is definitely not okay with the market, especially about the DeFi and DEX sector, and we may see deep corrections on many of these moon tokens soon enough, as they fail to deliver promises, or something like that, similar to what happened post 2017 alt market euphoria.
Or maybe, perhaps, the smart money will take all their profits to pump it up on Bitcoin and Ethereum, leaving everyone holding worthless tokens behind.
One thing for sure, if the sentiments are correct, we may see 90% of these DeFi tokens losing 90% of their value, as the market becomes rational again.
I'll be more confident on Bitcoin right now instead of these coins, though I'll be trying to get in with the trend.
I was checking out the DeFi Marketcap index on FTX, and I must say, I observed a clear Three drives pattern on the Zoomed out 4H chart.
Chart: DeFiPERP, 4H
link: https://www.tradingview.com/x/i9v7Amzw/
Here's what a three drives pattern mean: https://www.babypips.com/learn/forex/the-abcd-and-the-three-drive
Note: This market may stay irrational for a long time, and there's no guarantee that the pattern will follow and break down as expected. Reality can be something much different.
Ont thing which I can say with almost 90% confidence: Large cap heavyweights like Bitcoin, Ethereum, an the likes are going to stay for the long term!!
Trade safe, HODL Safe, #DYOR! Read disclaimer again! 😎
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