Thu, Oct 29, 2020 11:37 AM

The Autumn Fall of the Crypto — Will the Spring for the DeFi Return?

CJ DeFi October

DeFi tokens crashed in early October. The number of active users on decentralized exchanges has been steadily declining since September. There is a noticeable sentiment among investors that the DeFi ecosystem may collapse. However, the total cost of DeFi projects is growing. Does the end of the DeFi crypto world come or was it just temporary? Let's figure out what's going on.

What Happened To The Value Of DeFi Tokens In September And October

In early September, the well-known trader Peter Brandt announced that he sold all his assets, including cryptocurrency and shares, and transferred the capital into fiat USD. He suggested that the fall in the stock market, on which BTC and other digital coins showed a strong dependence, is just beginning.

The crypto euphoria of recent months has ended, researchers at the Coin Metrics analytical service suggested. Moreover, a lot of DeFi tokens were up hundreds of percent in late summer. Now many of them are at least twice as cheap as a month ago. Coin Metric emphasized that this correction was the second largest in 2020 after the market drop in March.

DeFi Market Quakes In October

On October 8, authoritative analysts from Santiment released their survey. It shows the DeFi crypto market is experiencing a tragic decrease. In one single day, the overall DeFi cap grew smaller by 25%, and trading amounts decreased by 30%. Recent market leaders like SUSHI, UNI, and YFI experienced the most strike, losing 51%, 38%, and 31% during the week. Here is the picture of the first week of October:

First week of October

According to DeFiPulse, the volume of assets in DeFi pools exceeded $11 billion at the end of September and has since dropped to $10 billion in the first week of October.

End of Sept

The good thing is this volume became even bigger by October 22nd.

Volume of October 22nd

But the DeFiPulse Index (TokenSet) fell 20% on October 6 to a record low of $71, nearly 50% below its launch level. However, until October 17, the situation only got worse.

DeFiPulse index

So the overall decline in the DeFiPulse Index for the month was almost 30%, for two weeks 18%, and for the last week — more than 10%.

The newborn DeFi Composite Index (according to Binance Futures) collapsed by 20% in one day. The index as of October 6 was 63% lower than the level corresponding to the first trading day in the last week of August.

Binance futures

Here is the situation on October 17 — the current index is half the price on the first days of August.

October 17

The second week of October has passed and many DeFi projects still get smaller, with rare exceptions (like Chainlink and Ren).

Top DeFi by market cap

Let's take a look at the results of the second week of October. There are many more DeFi tokens, the price of which not only did not fall but even increased (45 out of 100). But only 6 of them showed more or less tangible growth for the week (more than 10% of the price). And then, the capitalization of ALPHA on October 17 was equal to zero.

top defi by market capitalization

Positive Moments Regarding The DeFi Coins Market

 On the one hand, tokens are getting cheaper. At the same time, the total amount of funds blocked in DeFi coins grows again (see above). This is why market participants believe that the DeFi crypto technology itself has a future.

Despite the October crash, the 45 top tracked DeFi coins have expanded by 745% since the beginning of 2020, up from 240% in the last three months. According to the analysis by CoinGecko, for this period, investment in the crypto industry has increased by $9.15 billion.

Capital inflow

CoinGecko also noted the rise in popularity of decentralized exchanges, with trading volumes on the DEX growing 700 percent in the third quarter of this year.

Decentralized Exchanges

The chart of the ratio of trading volumes on decentralized and centralized exchanges according to the CoinGecko report looks like this:

Cryptocurrency exchanges

Dino Ibisbegovic, head of content and SEO at blockchain analytics portal Santiment, believes the negative numbers and pessimistic attitude surrounding DeFi on Twitter could mean potential benefits for investors. Citing two-year figures around Bitcoin, he concluded that a positive attitude towards the asset almost always foreshadowed an imminent collapse in cryptocurrency prices.


Although many analysts agree that DeFi will continue to grow, later on, the momentum is not very optimistic — prices and amounts of DeFi projects are still showing not very positive trends. Although the general DeFi market cap remains impressive, against the backdrop of the October trends, part of the funds flowed into Bitcoin and stablecoins. However, we would not predict the imminent end of the DeFi. This market will show many more interesting trends.

The content of this article is for informational purposes only and should not be construed as investment advice. We ask you to do your research.

Stay in touch!

Subscribe to our weekеly newsletter!