Bitcoin’s price has slightly increased while many of the white-hot DeFi tokens have fallen hard from their summer highs. Decline in DEX trading volume and significant drop of DeFi token values may be a sign of more investors moving to Bitcoin. Since DEX volume hit over $5 billion a day following the recent Harvest Finance hack, it seems to have declined rapidly.
Late October marked the worst week for DEX volume, as it dropped considerably, from an $8 billion record in September’s first week to roughly $3 billion from Oct. 19th to 25th. As for DeFi, the hype over the decentralized oracle boom have hit a wall.
Meanwhile, the Bitcoin price has risen approximately 24% since the beginning of October, marking a potential continuation of the bull market with numerous high profile investments being made by companies including Square and PayPal. Since PayPal’s announcement regarding Bitcoin support in the coming year, BTC's price surged by around 10%.
The decline in DeFi trading volume probably reflects the reduction of traders’ interest in new projects and that they are switching to Bitcoin. Despite all the challenges that DeFi is facing, numerous DeFi initiatives are still drawing significant attention from some investors. The latest DeFi-powered protocol Keep3r from Yearn Finance's founder is soaring on its first day of trading, indicating that there is still interest in the right project.
Why it matters: Bitcoin keeps coming up as the best store of value in the crypto space. While it is possible to cherry-pick some other tokens and show how much they have appreciated, Bitcoin seems to keep its value when a boom goes bust.
There is zero doubt that the DeFi space was being supported by loads of speculation – much like the Bitcoin bull run of 2017. There will be great projects that grow from this boom, but many are just as likely to go bust. In reality, the world doesn't need 1,000 DeFi lending platforms, nor are many likely to survive once the speculators figure out that the bull market is over, and prices are likely to grind lower over the coming years.
Unlike Bitcoin, which is designed to act as a store of value, many of the hot DeFi tokens were made to create governance over a platform, which may not end up being a spectacular business model. As a store of value, Bitcoin has performed well over the last decade, and it didn't have much support from the mainstream financial community.
Today, that is changing, and many investment professionals are starting to realize that decentralized currency may be the only way to guard value from the fiat apocalypse that is unfolding.