Let’s take a look at how the DeFi market moved in the past seven days, how it relates to the behavior of the overall cryptocurrency market and recent news. Let’s go ahead:
Similarly to what we saw in our Weekly Recap last Saturday, we can see that the climb of May 16th also reflected itself in the DeFi environment, with the overall market climbing nearly $50 million. Then it went on to climb up to the $800 million mark of TVL.
Since then movements have also paralleled those of cryptocurrency. However, as usual, the movements in the DeFi market are less sudden and climbs and drops are often mitigated by the fact that the value locked in the DeFi market exists in smart contracts whose conditions are not met instantaneously as the market moves, and instead release certain amounts periodically as they also lock more value.
This difference is seen clearly when we compare the overall change of the week between the DeFi market (4.62% growth) against others like BTC (2.09% growth) or the cryptocurrency market value (1.13% growth). Since negative trends have less of an effect on contracts that are already registered in decentralized ledgers, it is normal to experiment greater growths in the same period of time, but the DeFi market could also react later to these tendencies and turn big drops into slow downward drops.
This means that time is more of an important measure when talking about DeFi, and the overall crypto market might be an useful tool in predicting short term movements for this sector. We will continue to release this analyses a few days after our recap of cryptocurrency, so stay in touch!