The Daily Hodl
  • FEATURES
    • News
    • Bitcoin
    • Ethereum
    • Ripple and XRP
    • Altcoins
    • Trading
    • NFTs
    • Blockchain
    • Futuremash
    • Regulators
    • Scams
    • Crypto 101
  • HODLX
    • Latest Stories
    • FAQ
    • Submit Guest Post
  • INDUSTRY ANNOUNCEMENTS
    • Latest
    • Press Releases
    • ChainWire
    • Sponsored Posts
    • Submit Your Content
  • CRYPTO MARKETS
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Binance Coin (BNB)
  • BEGINNERS
    • What Is Bitcoin?
    • What Is Blockchain?
    • What Does Hodl Mean?
    • How to Pay Your Bills with Bitcoin
    • Best Bitcoin FAQs
    • Example of Bitcoin’s Purpose
    • Cryptocurrency Has Multiple Meanings
    • Authenticator Alert – Securing Your Crypto
  • SUBMIT
    • Guest Post
    • Press Release
    • Sponsored Post
    • Advertise
  • EMAIL ALERTS
  • DAILY HODL MIX
No Result
View All Result
  • FEATURES
    • News
    • Bitcoin
    • Ethereum
    • Ripple and XRP
    • Altcoins
    • Trading
    • NFTs
    • Blockchain
    • Futuremash
    • Regulators
    • Scams
    • Crypto 101
  • HODLX
    • Latest Stories
    • FAQ
    • Submit Guest Post
  • INDUSTRY ANNOUNCEMENTS
    • Latest
    • Press Releases
    • ChainWire
    • Sponsored Posts
    • Submit Your Content
  • CRYPTO MARKETS
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Binance Coin (BNB)
  • BEGINNERS
    • What Is Bitcoin?
    • What Is Blockchain?
    • What Does Hodl Mean?
    • How to Pay Your Bills with Bitcoin
    • Best Bitcoin FAQs
    • Example of Bitcoin’s Purpose
    • Cryptocurrency Has Multiple Meanings
    • Authenticator Alert – Securing Your Crypto
  • SUBMIT
    • Guest Post
    • Press Release
    • Sponsored Post
    • Advertise
  • EMAIL ALERTS
  • DAILY HODL MIX
No Result
View All Result
The Daily Hodl
No Result
View All Result

Decentralized Danger: Is the DeFi Boom Killing Off Altcoins?

by Dmytro Spilka
October 17, 2020
in HodlX

HodlX Guest Post  Submit Your Post
 

It’s fair to say that 2020 has belonged to DeFi tokens. The performance of yearn.finance and widespread excitement for assets like Uniswap and Compound had captivated investors, with many currencies eclipsing the traditional top 10 of altcoins. But will the arrival of the DeFi boom kill off some of the cryptocurrency world’s mainstays?

The rapid rise of decentralized finance (DeFi) has been heavily reflected in the soaring prices of yield-related tokens, such as yearn.finance, LEND and others rocketing to unprecedented highs in 2020. The huge rise in YFI alone has rocked the world of crypto.

yearn.finance (YFI)
Source: CoinGecko

Peaking at around $40K, yearn.finance eclipsed Bitcoin’s famous rally of late 2017, and far outperformed the world’s most popular cryptocurrency and altcoins by a considerable margin over the summer of 2020.

Figures show that some of the more popular DeFi tokens even outperformed governance and infrastructure projects like Chainlink and UMA – despite UMA becoming one of the largest decentralized finance protocols in September.

Much of the excitement surrounding the emergence of DeFi relates to its practical application towards blockchain-based smart contracts and smart insurance, where financial technology can create watertight binding agreements between parties without the need for mediators.

However, with investor attention firmly turned to DeFi projects and smart contract platforms like Ethereum and Cardano, it’s become clear that a number of altcoins – particularly those representing sectors such as cross-platform payments and swift transactions – have been left behind.

Source: Cane Island Digital Research via Twitter

The likes of Litecoin, EOS, Ripple and Stellar Lumens have struggled to keep up with the rise of Bitcoin and Ethereum – which has been central to this summer’s DeFi boom.


Today, as investors remain preoccupied with scouting out new DeFi projects, much of the cryptocurrency market has slumped, leaving numerous altcoins in the mire. So, will our obsession with decentralized finance kill off the altcoins we’ve become so familiar with in recent times? Or will the tables turn for the likes of Litecoin and Ripple? Let’s take a look at what the future holds for the crypto market.

Testing times

The end of summer 2020 has been a profoundly difficult time for all altcoins. Polkadot has been among the worst performers during the September and October slowdowns, decreasing by around 10% at the start of October alone.

The correction of DOT has come as many altcoins, as well as Bitcoin and Ethereum, are slowly declining. While the likes of Bitcoin are unlikely to fall to technically significant levels, Polkadot may be facing a severe correction if it drops below a significant support level. The support level has remained somewhat stable in recent weeks, meaning that a drop could be a worrying sign for investors holding out hope for a bull run any time soon.

Analyst Nicholas Merten believes it’s not yet time to push any panic buttons in the world of crypto, and noted that the strength of Bitcoin should be enough to steer many altcoins to safety.

“Quite frankly, guys, from what we’re seeing here with the actual inflows of capital from companies like MicroStrategy, in this case, Grayscale, there is a lot more institutional demand or corporate demand for Bitcoin in this case that’s actually going to probably keep it up as an asset, and that’s not going to allow the market cap to go down,” said Merten. “So long as there is not a massive outflow of Bitcoin, there will likely not be massive outflows of the total crypto market.”

At the time of this writing, the exchange rate between Bitcoin and Litecoin is 1:217.7 – a relatively consistent figure despite the modest values of Litecoin. According to Merten’s insight, a Bitcoin rally may be a huge contributing factor to the upturn in fortunes for Litecoin and the market as a whole.

Waiting for the DeFi bubble to burst

Back in July, DeFi seemed like an unstoppable force. Related tokens were pumped up to generate widespread gains for investors before prompting a range of clone and meme projects that attempted to emulate the hype.

As some tokens in the sector have already taken huge hits to their value like SUSHI, other tokens like Hotdog shed 99% of its value in the space of five minutes.

It’s worth acknowledging that decentralized finance offers plenty of practicality in the efficiency of smart contract solutions that its projects champion, but many of the DeFi tokens entering the market offer very little in terms of usability – causing them to be more reminiscent of the ICO space in 2017 and 2018.

Given the huge levels of inauthenticity in the DeFi sector, many of its associated assets may go the same way as the ICO tokens before it, especially as the Ethereum blockchain continues to burst at the seams. Should this occur, the cryptocurrency market wouldn’t directly suffer, but rather the investment and profits would be returned back to other sectors of the market – benefiting the likes of altcoins and Bitcoin as a whole – which have been suffering in the wake of the DeFi boom.

As 2020 draws to a close, the world of crypto has remained as volatile as ever. With DeFi shaking the marketplace up, a potential bubble burst could spell the end of the bearish winter months and revive many of the altcoins that may be perceived to be on the ropes at present.


Dmytro Spilka

Dmytro Spilka is a tech and crypto writer based in London, United Kingdom. Founder of Solvid and Pridicto, an AI-based traffic forecast software. His work has been published in IBM, TechRadar, Bitcoin.com, FXStreet, CoinCodex, CryptoGlobe and CryptoSlate.

 

Check Latest Headlines on HodlX


Follow Us on Twitter Facebook Telegram

Check out the Latest Industry Announcements
 

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Featured image: Shutterstock/GrandeDuc

Submit a Press Release

Industry Announcements

  • Addressable Raises $7.5 Million To Enable Web 3.0 Companies To Acquire Users at Scale
    January 31, 2023
  • SIMBA Chain Awarded $30 Million US Air Force STRATFI
    January 31, 2023
  • Bunzz Raises $4.5 Million Seed Round To Expand Its Smart Contract Hub for DApp Development
    January 24, 2023
  • Dogecoin and Shiba Inu Better Watch Out – Floki Just Had Three Big Things Happen for It
    January 24, 2023
  • Crypto Marketing – What Initiatives Will Bring More Value and Users in 2023
    January 23, 2023
  • Make Crypto Payments on BChat Web 3.0 Messenger – BChat Integrates Beldex Wallet
    January 22, 2023
  • KEY3.id Supports Multi-Chain Transaction, Partnership With KuCoin Wallet, CoinHub Wallet and Wallet3 To Launch 2023 Lucky Transaction Campaign With Over 30,000 Participants on Social
    January 20, 2023
Submit a Guest Post
ADVERTISEMENT
Bitcoin
$23,146.20
$23,146.20
1.55%
Ethereum
$1,585.16
$1,585.16
1.19%
Cardano
$0.390903
$0.390903
5.09%
XRP
$0.407688
$0.407688
3.16%
Dogecoin
$0.095655
$0.095655
8.64%

Spotlight

  • Web 3.0 Adoption Requires Education, Better Security and Realistic Expectations
    January 25, 2023
  • Anthony Scaramucci’s Skybridge Capital Suffers 39% Loss in 2022 Amid Brutal Crypto Bear Market: Report
    January 28, 2023
  • Analyst Benjamin Cowen Says Bitcoin Could Be on Cusp of Major Trend Shift As Potential Repeat of 2019 Appears
    January 31, 2023
  • Analyst Benjamin Cowen Issues Crypto Warning, Says Bitcoin (BTC) Rally Likely Unsustainable – Here’s Why
    January 24, 2023
DON'T MISS A BEAT
Crypto headlines delivered daily
to your inbox
BTC, ETH, XRP news alert options
By joining The Daily Hodl news list you agree to our
Terms and Conditions and Privacy Policy.
Featured Image: Shutterstock/Billion Photos

Cryptocurrency news and analysis, covering Bitcoin, Ethereum, Ripple, XRP, altcoins and blockchain technology

Categories

Bitcoin • Ethereum • Trading •
Ripple and XRP • Altcoins •
Blockchain • Regulators •
Scams • Crypto101 • HodlX •
Futuremash •
Industry Announcements

ABOUT US | EDITORIAL POLICY | PRIVACY POLICY
TERMS AND CONDITIONS | CONTACT | ADVERTISE

JOIN US ON TELEGRAM

JOIN US ON TWITTER

JOIN US ON FACEBOOK

COPYRIGHT © 2017-2023 THE DAILY HODL

No Result
View All Result
  • FEATURES
    • News
    • Bitcoin
    • Ethereum
    • Ripple and XRP
    • Altcoins
    • Trading
    • NFTs
    • Blockchain
    • Futuremash
    • Regulators
    • Scams
    • Crypto 101
  • HODLX
    • Latest Stories
    • FAQ
    • Submit Guest Post
  • INDUSTRY ANNOUNCEMENTS
    • Latest
    • Press Releases
    • ChainWire
    • Sponsored Posts
    • Submit Your Content
  • CRYPTO MARKETS
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Binance Coin (BNB)
  • BEGINNERS
    • What Is Bitcoin?
    • What Is Blockchain?
    • What Does Hodl Mean?
    • How to Pay Your Bills with Bitcoin
    • Best Bitcoin FAQs
    • Example of Bitcoin’s Purpose
    • Cryptocurrency Has Multiple Meanings
    • Authenticator Alert – Securing Your Crypto
  • SUBMIT
    • Guest Post
    • Press Release
    • Sponsored Post
    • Advertise
  • EMAIL ALERTS
  • DAILY HODL MIX

© 2023 The Daily Hodl