An economist has noted that the DeFi sector will witness price surges if investors move their capitals into beta assets
The Decentralized Finance sector has been feeling the heat of the downtime witnessed by financial markets around the globe. Despite projects in the market seeing skyrocketed prices in recent month, the buzz generated has considerably died down in the previous months.
The sector first witnessed the first of what would be a continued price decline after bitcoin saw a bearish run to register a market price of $12,400. After the bearish run experienced by Bitcoin, the majority of the coin in the DeFi space has experienced a massive decline with some posting massive losses.
Bitcoin surge was a catalyst for DeFi token decline
During the months when the coins experienced a decline, most of the erased the gains they have taken weeks and in some cases days to accumulate in a short space of time. In the last few days, top coins like Bitcoin and Ethereum have recorded surges which means the market is now bullish at this present time.
With the assets in the centralized markets seeing greens, it has not stopped the plunge of DeFi assets due to its seemingly “high beta” value. Despite the decline of DeFi assets, an economist has noted that he is expecting the coins to make a bull run in the coming months. The bull run will act as the momentum that the DeFi sector will build on.
Bitcoin has once again shown why it is the kings of all crypto assets has it has led the market into a bullish run. The leading digital assets recorded a price above $12,000 in the previous weeks and reached $13,200 before it faced some resistance.
During the first day of the Bitcoin price surge, investors moved away from riskier assets as they sold off their altcoins. The trend was, however, countered after Ethereum surged past $400 resistance.
Despite Ethereum witnessing a significant price move, DeFi assets have still failed to capitalize on that to make a price surge with many of them trying to stabilize or experiencing bearish moves.
Economist backs DeFi hype to return by December
According to data from CryptoSlate, the DeFi sector has witnessed only a 7% increase today. Notably, Wrapped Bitcoin and RenBTC are significant contributors to the gain experienced by the sector.
Backing DeFi tokens to make price surges, Alex Kruger, a crypto economist have noted that DeFi tokens will begin to experience massive price surges soon owing to investors suggesting on taking on riskier plays. However, he also pointed out that the second wave of the DeFi hype should be expected around December when investors begin to move their capital into beta assets.
Giving his review, Alex says he believes that the DeFi market is not dead and will spring back up soon. “Bigger picture, DeFi is not dead, it will eventually resume its 2-way high beta behavior (vs BTC). I think it will restart a bull-run come December, once the market goes back into risk-on mode. Not as strong as the last run, as crazy yields won’t come back,” he said. Noting the reason for the earlier faltering of prices in the market, he said that the emergence of scam tokens in the markets is what scared investors away. However, he said the new hype would come from quality and confirmed markets.