The total value of funds blocked on DeFi platforms has dropped more than 20% from a peak of $ 9.512 billion.
The Decentralized Finance, or DeFi, market has seen its first tangible correction. Amid a massive sale of DeFi tokens, the total amount of funds locked on DeFi platforms dropped to $ 7 billion, 22% below the all-time high reached in early September.
The fall coincided with a sell-off in the market
The total value of digital assets locked in DeFi (total value locked, TVL) peaked on September 2 at 9.512 billion and began to decline. Around the same time, a correction began in the cryptocurrency market. Bitcoin started falling after a failed attempt to break above $ 12,000. The cryptocurrency fell 12% in a week and twice went below $ 10,000. At the time of writing, BTC / USD is trading at about $ 10k , practically unchanged from the beginning of the day.
The first catalyst that triggered a trend reversal were probably miners actions. There was an abnormally high outflow of funds from the wallets of bitcoin miners to various cryptocurrency exchanges.
Ethereum, the second largest cryptocurrency, and the basis for all DeFi projects, also rushed down after Bitcoin. The coin lost more than 17% over the week and came close to support at $ 300. At the time of writing, ETH/USD is trading at $ 350, but it is still far from the bearish trend reversal. The sharp drop in major cryptocurrencies scared profitable farmers and prompted them to take profits, which only exacerbated the decline across the entire spectrum of the market.
The drop in Ethereum, in addition to being correlated with Bitcoin, is also explained by sales from profitable farmers, whose annual profitability unexpectedly dropped by 35% in three days.
Passion for SushiSwap
An incomprehensible situation arose around the sensational SushiSwap project, which frightened investors and accelerated the flight. On Saturday, it became known that the anonymous creator of the platform, calling himself Chef Nomi, has sold all of his SUSHI tokens. Trying to explain his act, he referred to the creator of Litecoin, Charlie Lee, who also sold his coins at one time in order to concentrate on the development of the project.
Obviously, the act of the sushi chef only increased the panic in the market and accelerated the outflow of funds from the DeFi industry. Investors began to withdraw money from the platforms, fearing that the administrators of other projects would do the same.