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Bitcoin Price Remains Tepid as DeFi Boom Continues to Steal Limelight

2020.09.14 Robbie Liu

Last week saw major centralized exchanges bolstering the DeFi space. Led by OKEx, CEX giants have not only listed multiple DeFi tokens but have also introduced innovative products, such as OKB Staking, that have been well-received by market participants.

The total value locked in OKB Staking exceeded $200 million on Monday, with more than 16,000 participants. This move significantly lowers the barriers for retail traders participating in DeFi, with no additional on-chain gas costs.

OKB also picked up sharply over the last week due to both increased demand and decreased circulation, surging 17.87% to become one of the leading performers. 

Bitcoin (BTC), on the other hand, showed little enthusiasm last week, down a minor 0.08% after testing the $10,000 mark several times. The leading digital currency started a rebound on Wednesday and reached a weekly high of $10,580 early Sunday morning — as per the OKEx BTC Index price — before dropping to close the week at $10,300.

Polkadot (DOT) was another altcoin that performed well last week, rising 8.93% to take the fifth spot in terms of market capitalization. Chainlink (LINK), meanwhile, fell to sixth place in the market cap rankings after dropping 9.07%. Ether (ETH) remained mostly unchanged, up a minor 0.44%, while EOS and TRON (TRX) were down 7.44% and 5.09%, respectively. 

Weekly returns of major cryptocurrencies, 9/7–9/13. Source: TradingView

Looking at DeFi tokens, yearn.finance (YFI) and Loopring (LRC) outperformed competitors thanks to their upcoming Coinbase Pro listings, giving them weekly returns of 44.78% and 37.27%, respectively. DFI.money (YFII), a YFI fork, also realized a 30.43% weekly gain. 

Weekly returns of major DeFi tokens, 9/7–9/13. Source: TradingView

The worst-performing token in the DeFi sector was SushiSwap (SUSHI), down 28.57%. SUSHI closed the week at $2.20, down from its seven-day high of $3.50. 

The total value locked in SushiSwap has also fallen sharply after it lowered the block rewards this weekend. The TVL has tumbled to $808.3 million — a 42.74% drop over the last 24 hours, as per DeBank's data. Previously, SushiSwap's TVL had reached $1.5 billion and was ranked first. It is interesting to note that on Sept. 9, SushiSwap successfully migrated $800 million from Uniswap due to yield farmers seeking SUSHI block rewards.

This time, due to the huge cut in block rewards from 1,000 to 100 SUSHI, the profit-seeking nature of yield farmers led to the withdrawal of liquidity very quickly. Its $14 million worth of buybacks and $2 million in airdrops don't seem to have helped the price much. 

Total value locked in top 10 DeFi projects — 9/14. Source: DeBank

At the same time, we noticed that Uniswap's TVL surged 62.63% in the last 24 hours. Uniswap and SushiSwap are even more vastly different when it comes to the number of 24-hour users and the number of transactions.

Uniswap V2 vs. SushiSwap. Source: DeBank

Moreover, due to the high yields on offer in DeFi, nearly 100,000 BTC has been "moved" to the Ethereum blockchain, as per DeFi Pulse data. The most popular BTC to ETH cross-chain project is Wrapped Bitcoin, which accounts for more than 66%, or 53,000, of all cross-chain BTC.

BTC locked in DeFi. Source: DeFi Pulse

Looking at Bitcoin, we saw CME release the latest (as of Sept. 8) Bitcoin futures position data. Bitcoin fell by more than $2,000 in the time frame corresponding with this report, and the data reflects possible reactions from institutional investors.

We can see that the open interest fell sharply, from an all-time high of 11,617 to 8,198, hitting its lowest level since July 7, and all types of accounts have undergone position reductions. 

Notably, long positions in leveraged fund accounts plunged from 4,271 to 2,758, while short positions fell from 6,842 to 4,661 during the same time. Leveraged fund accounts had repeated profits after increasing their short positions last week, but the current position reductions reflect their uncertainty about Bitcoin's price direction.

CME Bitcoin futures data — Number of leveraged funds longs vs. shorts. Source: Quandl.com

Looking ahead this week 

The Federal Reserve will hold another Federal Open Market Committee meeting this week — the last before the presidential election.

After five consecutive months of sharp gains, U.S. stocks have entered a corrective period since September began. Given how Bitcoin is still correlated with the equities market, traders need to pay attention to how U.S. stocks perform this week.

In crypto, OKEx announced the transformation of OKChain into OKExChain, Coinbase Pro will be listing YFI and LRC, and UniTrade (TRADE) will launch its official platform on Sept. 30. 


Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.


OKEx Insights presents market analyses, in-depth features, original research & curated news from crypto professionals. 

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