Decentralized financing and the numerous platforms that offer investment services have been the topic of the cryptocurrency sector for several months. This has resulted in investors making spectacular profits on some of the top DeFi tokens such as Uniswap’s UNI and AAVE.
The fast-moving prices and 1,000% annual percentage return on tokens staked sparked applause from investors as the market surged, but recent selling pressure, which fell below $ 45,000 as Bitcoin (BTC) price, shows that the Highest fliers are often the fastest falling when traders rush to exit their positions and secure their profits.
Daily market performance in cryptocurrencies. Source: Coin360
On February 22nd, the price of Bitcoin entered a sharp correction phase, with the largest digital asset falling more than 20% from its all-time high of $ 58,274. In this case, double-digit corrections were also made to most of the altcoins, and DeFi tokens like PancakeSwaps CAKE fell as much as 55%.
The total value locked in DeFi shows the reliability
Total Value Locked (TVL) in DeFi platforms was also impacted as Bitcoin and Altcoins were corrected. Data from DeFi Llama shows that the combined TVL of all DeFi platforms fell from $ 64.89 billion to $ 54.22 billion on Feb.24. Cointelegraph also reported that this week’s correction resulted in the second-largest DeFi loan liquidation day in history.
Total value locked in DeFi. Source: DeFi Llama
The TVL decline is due more to declining token values than to log outflows, indicating that token holders remain committed to expanding decentralized funding further and that current yields continue to encourage investors to get involved.
Market analysis shows that despite the recent $ 5.8 billion liquidation of Bitcoin and Altcoin, the bulls remain bullish, viewing this price drop as a sign of a healthy market.
The same applies to the DeFi sector, which has been in a strong upward trend since the beginning of the year. The increasing DEX volume and increasing TVL show that DeFi is still in an early stage of growth. While withdrawals are expected, the general trend is positive as institutional and retail investors increasingly invest in this emerging asset class.