DeFi Futures Index Collapses Erasing All Gains Since June 2020

UTC by Bhushan Akolkar · 3 min read
DeFi Futures Index Collapses Erasing All Gains Since June 2020
Photo: Depositphotos

The DeFi market has plunged over the last month of October as some of the top performers of summer 2020 have seen valuations crashing. Analysts think that the majority of the money from the DeFi market profit-booking has gone to Bitcoin.

The summer 2020 party is all over for the decentralized finance (DeFi) investors as the sector witnesses a massive sell-off. The recent market data shows that the Defi Index Futures have collapsed smoking up all gains since June 2020. Data on the derivatives exchange FTX shows that perpetual futures for the DeFi Index have tanked over 60% since the September levels of $3500. The scenario is similar for other platforms and exchanges. The Binance DeFi Index Futures also tanked over 70% from its August highs. Since its launch, the Index has been fairly trading negative every week at a loss.

Many analysts have been arguing that funds from the DeFi market have started flowing back to Bitcoin. During the period of the DeFi crash, Bitcoin has been consistently making new highs. Over the period of last month, the BTC price has surged sharply more than 30%. At press time, Bitcoin (BTC) is testing waters inching closer to $14,000 and trading at $13,822 with a market cap of $256 billion.

Bitcoin remains the obvious choice for investors who have cashed out gains during the summer rally in the Defi market. Apart from being a good investment, Bitcoin (BTC) also offers a good cushion against the current macroeconomic backdrop. The world’s largest cryptocurrency has been consolidating its position as a potential hedge and leading against its top-competitor and yellow metal Gold.

Major DeFi Index Crash in October

DeFi investors suffered major blows during the month of October with some of the top DeFi tokens losing anywhere between 30-50%. Andre Cronje’s Yearn Finance (YFI) was the biggest loser crashing nearly 56% in the month of October. The YFI DeFi token crashed from $24,000 at the start of October to $10,500 by the end of the month.

From its high of $1.27 billion market cap in mid-September, the YFI token has lost around $1 billion. Currently, the YFI Defi token market cap is around $312.9 million. Uniswap which created much frenzy by launching its UNI token is another big loser. The Uniswap (UNI) price tanked over 40% in October.

The next three big DeFi market losers are Synthetix Network (SNX), Compound (COMP), and Uma (UMA), each losing 37%, 31%, and 23% respectively. Below is an interesting correlation between BTC, ETH and other DeFi tokens’ performance.

The only two DeFi that have surged in October are Chainlink (LINK) and REN. The Ren protocol surge is more likely because of its affiliation with tokenized BTC. The Ren protocol has the second largest number of tokenized BTC at the moment. On the other hand, the demand for Chainlink’s oracle service among DEXs and other decentralized platforms is the reason behind its continued strong performance.

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