Decentral Block Post

Yearn.finance’s (YFI) governance token plummeted over 43% in just five hours on Nov. 18 after rallying almost 170% early in the month, stirring fears about a possible exit scam. 

During the dramatic drop in value, over $300 million was wiped out in market capitalization from November’s gains, according to data from CoinMarketCap. At the time of writing, the YFI token is trading at $9,069 from $14,185 a day before. However, the token is still up 83% over the past 30 days.

The sell-off has triggered another weekend of fear, uncertainty and doubt, or FUD, within the crypto community. On X (formerly Twitter), some users claim that 50% of the token supply was held in 10 wallets controlled by developers. However, Etherscan data suggests that some holders may be crypto exchange wallets.

In addition, some X users pointed out that opening short positions may have triggered the move. Data from Coinglass shows a jump in YFI open interest, indicating that traders are shorting the coin after November’s gains.

“I bought the dip… someone sold 1000 coins perhaps that’s why it dropped massively. Will see,” commented a trader on X. According to another user, YFI’s price movement after the decline is unusual for exit scams:

The decentralized finance (DeFi) market has been one of the most exciting and volatile sectors in the crypto outside of Bitcoin (BTC). In 2020, the DeFi sector experienced a bull market that saw the total value locked (TVL) in decentralized finance protocols surge from $1 billion to over $100 billion. However, the DeFi market has also been prone to significant corrections. In 2021, the DeFi market experienced a correction that saw the TVL fall from $100 billion to $40 billion.

Despite the volatility of the DeFi market, there are ways for traders to catch onto when the niche crypto sector begins to show sustained bullish momentum. Three of the most important metrics to watch are TVL, a platform’s fee revenue and the number of non-zero wallets holding tokens.

Let’s dig in a bit deeper to explore how these metrics can be used to guage the health of the DeFi sector.

Increases in the total value locked

TVL is one of the most widely used metrics to measure the overall health of the DeFi ecosystem. TVL represents the total amount of cryptocurrency assets locked in DeFi protocols. When TVL rises, it suggests increasing demand and use of DeFi services, which can signify a bull market.

While current TVL is slightly below the 2023 peak set on April 15 of $52.9 billion, it has risen since the start of the year. Since Jan. 1, TVL across the crypto market is up $7 billion, eclipsing $45 billion.

Bitcoin (BTC) circled $36,000 after the Nov. 16 Wall Street open as analysis hoped for a deeper BTC price comedown.

Bitcoin traders map out likely bottoms

Data from Cointelegraph Markets Pro and TradingView followed a retracement from intraday highs of $36,600.

Having failed to establish a breakout beyond 18-month highs during the week, Bitcoin was uninspiring for market participants, some of whom hoped to see a fresh correction to retest lower levels.

“Would be happy to see this latest rally complete the round trip back to $35k. Would be even happier to see a retest of $33k,” monitoring resource Material Indicators wrote in part of the day’s X commentary.

A snapshot of BTC/USDT order book liquidity showed support building at $35,000.