Bitcoin Sell-Off Forces DeFi Platforms TVL to below $100 Billion

The recent Bitcoin sell-off caused by last week’s market crash has reduced the value of DeFi tokens by almost 60%. This has pushed the Total Value Locked for DeFi platforms to below $100 Billion.

Decentralized Finance (DeFi) is one reason that contributed to the boom of the cryptocurrency market this year. This year, some of the most successful DeFi protocols have been Aave (AAVE), Uniswap (UNI), and Yearn.Finance. The value of older protocols such as Compound (COMP) and Maker (MKR) also increased.

The tumble of the Crypto Market

The crypto market is highly volatile, which means that the tokens’ prices keep going up and down. This time, the crypto market is rapidly falling, and there is no telling when the fall will end.

Values of hot DeFi tokens have been reduced by nearly 60% from the all-time highs recorded during the year. In addition, the crypto market has significantly tumbled, with $1.2 trillion worth of tokens being wiped out of the market in under two weeks.

The total value locked (TVL) on DeFi platforms has declined from its highest value of $164.2 billion reported in May 10 to the current TVL of $93.34 billion from the recent crash.

The TVL on DeFi protocols comes from the combined values of native tokens, Bitcoin (BTC) and Ether (ETH). The market turmoil has hence caused the fall in total TVL as traders rushed to withdraw their funds.

A surge in DEX Volumes

Because of the rapid sell-offs, the activities on crypto exchanges have also increased. Decentralized exchanges have also recorded a similar surge, with the activities on the Ethereum network currently standing at 10% of the total DEX volumes in 2020.

The total market capitalisation for altcoins has declined by over 50% to reach $705 million from the $1.48 billion reported on May 11.

New traders in the crypto market who joined during the boom are experiencing sharp volatility for the first time. The worry from these traders has also led to the re-emergence of major Bitcoin critics such as Nouriel Roubini and Paul Krugman.

However, the recent Bitcoin turmoil has not been all bad. Some more agile traders have bought in the dip, which has made BTC more resilient in the crypto market crash than other cryptocurrencies. The recent surge in Bitcoin’s value also makes analysts hopeful that the Bitcoin bubble will soon pop out again, and the token may soon regain its all-time high value of $63,500.

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