Could Current DeFi Rebound be Indicative of Broader Market Revival?

Godfrey Benjamin  Oct 03, 2022 10:30  UTC 02:30

2 Min Read

The broader digital currency ecosystem has been well-reflected by the volatility that has kept the combined crypto market cap below the $1 trillion benchmark for many weeks now.

The experienced plunge has been an encompassing one, and all ecosystems in the crypto space, including the Decentralized Finance (DeFi) offshoot, have recorded a similar valuation drop. The DeFi ecosystem has slumped from a peak of $165.22 billion as of April 2 to $54.85 billion at the time of writing, with the drop coming off bigger than the slump of the market cap from about $3 trillion to the current value of $931 billion.

Despite the gloomy nature surrounding digital assets at this time, the current DeFi valuation came with a significant 24 hours growth which was pegged at 29.26% at the time of writing, according to data from CoinMarketCap.

The growth of the DeFi subsector is quite unusual, as the combined market cap had a 0.69% growth over the same time frame. 

Coincidence in DeFi Growth and Crypto Slump?

The current growth in the DeFi market can be tagged as an intriguing coincidence as it comes at a time when industry participants are exploring how to invest in Ethereum as it now operates using the Proof-of-Stake (PoS) consensus model.

Among the major DeFi tokens that have added to the bottom line are the biggest gainer, Terra Classic (LUNC), which has climbed 69.85% to $0.0003375. The digital currency, linked to the Terraform Labs startup, collapsed back in May, dropping more than 99% of its value. 

Uniswap (UNI) is also outperforming the market atop a 10.69% growth to $6.29. Reserve Rights and Maker are also amongst the major tokens that have added to the current bullish out of the broader market.

Price and valuations grow when investors inject capital into the ecosystem, and with cash inflows coming into the DeFi world, one may assume that this liquidity injection will soon trickle down to the broader crypto ecosystem. Should this happen this week, it will soon stir a change in the industry’s outlook, characterized by flattening volatility that will usher in stability and, eventually, a good growth trend.

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