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Money Started coming back to DeFi Sector

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DeFi Sector

“Money started coming back to DeFi Sector.” What tokens to buy for investors?

Defi sectors

Over the past 5 days, popular DeFi tokens have risen in price by 60-100%. Perhaps this is just the beginning of growth, analysts say. They named promising coins and warned which assets could lead to capital loss.

Since the beginning of September, Bitcoin has risen in price by 54%. Against the background of the growth of its rate, the price of DeFi tokens decreased. Coins, which in summer showed an increase of hundreds and thousands of percent, fell several times in October. For example, the price of the YFI cryptocurrency in mid-September set a record of $ 44,000, but in November it fell below $ 8,000.

In recent days, the situation in the DeFi market has changed, popular tokens have returned to growth. Since November 5, when YFI fell in price to $ 8 thousand, its rate increased by 81%, to $ 14.5 thousand. Other popular DeFi tokens showed similar dynamics, for example, SNX rose in price by 60%, to $ 4.2, AAVE – by 105%, up to $ 52.

Is the capital returning to the Defi sector?

Spencer Noon, head of investment firm DTCCapital, suggested capital was starting to return to the DeFi sector. He tweeted that investors are buying “blue chips” from DeFi, which may soon refresh all-time highs.

 

DeFi-tokens are an investment-attractive asset, says Viktor Pershikov, lead analyst at  8848 Invest. Now the sector is going through a standard cyclical development path in the crypto market, he noted. In the summer there was a sharp rise, then a decline of 70-80%, and now we can expect a wave of growth. The expert named UNI (UNI), ChainLink (LINK), Aave (AAVE), and Synthetix Network Token (SNX) coins as interesting investment options.

“I expect additional capitalization of the sector in 2021 and new waves of growth of DeFi projects tokens. In terms of fundamentals, I would recommend buying large and reliable projects like UNI, LINK, AAVE, and SNX. They have proven their effectiveness not only from the point of view of the DeFi sector, but also for the development of blockchain technologies, and represent diversified DeFi solutions in terms of investment, ” – Pershikov said.

He does not recommend investing in newly created, young DeFi solutions, including clones of popular DeFi projects. You can lose money on this. Which of the newly created projects will become financial and investment attractive can only be said after some time, the expert explained.

EXANTE analyst Viktor Argonov advised investors to be careful when investing in DeFi tokens, as this is a new industry. He also suggested not to be limited to buying only “HYIP” coins. It is safer to invest in the DeFi token basket. It is better to invest capital in different assets, and the degree of diversification should be the higher, the lower the trader’s competence.

Argonov invited investors to study the most famous DeFi tokens. In addition to AAVE, the expert included the Frontier (FRONT), REN (REN), Flamingo Finance (FLM), Loopring (LRC), and Venus (XVS) coins.

What is the reason for the growth in the DeFi sectors?

Defi sector

In his opinion, the current growth in the DeFi sector may be associated with the not yet officially recognized victory in the US presidential election by Joe Biden. He appointed Gary Gensler, ex-chairman of the Commodity Futures Trading Commission (CFTC), known for his respect for the blockchain and the merits of Bitcoin’s creator Satoshi Nakamoto, as his advisor.

“DeFi’s strengthening is highly likely associated with Joe Biden’s leadership in the elections. At the time of Trump’s leadership, there were denials of registration of bitcoin ETFs, the suspension of Libra and TON projects, criminal cases against the owners of BitMEX.” – Argonov explained.

He added that in early October, Hester Pearce, Commissioner of the US Securities and Exchange Commission (SEC), commented that “the DeFi sector will challenge the regulatory framework and force many questions to be asked about what it is and how to regulate it.” The day after that, the DeFi sphere lost a quarter of its capitalization. Investors were probably afraid that the industry would become the new enemy of the US government, the analyst admitted.

In mid-September, former product manager at analytics firm Messari Qiao Wang called DeFi tokens “the investment opportunity of the decade.” According to him, missing out on the opportunity to invest in these coins is the same mistake as not buying Bitcoin in 2013 or Ethereum in 2015.

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