Bitcoin broke above $10,000 this week, pushing toward $11,400, and traders began pulling money out of decentralized finance tokens that had surged on hype just weeks earlier. The top cryptocurrencies
Bitcoin broke above $10,000 this week, pushing toward $11,400, and traders began pulling money out of decentralized finance tokens that had surged on hype just weeks earlier.
The top cryptocurrencies are rallying. Bitcoin jumped 16% over the past week, Ethereum climbed 22.5%, and Ripple gained 17%. Litecoin, Bitcoin Cash, Cardano, and EOS followed the same path, all breaking through major resistance. DeFi tokens, by contrast, are falling.
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Thirty-one DeFi tokens have dropped over the past seven days, according to data from Messari. Compound, Aave, and Synthetix, which had surged in recent weeks, have tumbled 8% to 32% against Bitcoin. Individual tokens have lost more than 20% in a single day.
Kelvin Koh, a former Goldman Sachs partner, traced the decline to capital rotation. "A small move in Bitcoin has created ruptures in several speculative DeFi assets," he said. As Bitcoin prices climbed, traders who had bet on DeFi tokens began cashing out those positions and moving the money into Bitcoin.
Koh warned that additional capital flowing into Bitcoin and Ethereum will expose which DeFi projects have real value. "A further rotation of capital into $BTC and $ETH will expose some of the DeFi projects that are overhyped," he said.
The analyst also flagged a potential downward spiral. When prices drop, investors look for the exit, Koh noted. That panic selling can accelerate losses.
But not all DeFi projects will disappear. Koh expects that those with real value propositions will survive the selloff. For now, Maker is the best performer among major DeFi tokens with a 5% gain in the past 24 hours. Chainlink, Aave, Augur, Synthetix Network, Balancer, Curve Finance, and Kyber Network are all trading lower.
MiningPool content is intended for information and educational purposes only and does not constitute financial, investment, or legal advice.
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