Why Ethereum DeFi Is Suffering Today
Ethereum enjoyed a strong rally on Thursday despite some weakness in the price of Bitcoin and legacy markets. ETH surged from the $360 lows on Wednesday to a local high just above $390.
The coin was benefiting from the launch of Uniswap’s UNI token, which can be mined using ETH, thereby making it an attractive asset to own. Many joked that the ETH rally in response to this development was due to the “Hayden Effect,” referencing Uniswap’s founder.
Unlike normal, though, altcoins dropped despite the strength in the price of Ethereum. This was unnerving as ETH has led the altcoin market higher over recent months, often rallying prior to smaller coins.
Top altcoins, especially those pertaining to the decentralized finance space, shed a handful of percent during Thursday’s trading session.
Coins like UMA, Band Protocol, Synthetix Network Token, Aave, Nexus Mutual, amongst others are down 5-15% in the past 24 hours. This comes in spite of immense strength in Ethereum’s trend as aforementioned.
Many analysts think that this trend pertains to the extremely high gas fees and poor user experience in much of the DeFi space.
One analyst recently explained that the growth in DeFi is clearly stalling:
Others have specifically commented that Ethereum’s gas fees recently spiking to all-time highs, where it costs over $100 to do simple DeFi interactions, makes this space’s growth naturally limited.
Long-Term Trend of Growth Remains
Many think that this space’s long-term growth trends, though.
Andrew Kang, CEO of Mechanism Capital, shared the below Twitter thread in July.
The thread suggests that DeFi is likely at the start of a parabolic growth cycle due to a variety of market trends:
Others agree with Kang’s sentiment that this facet of the crypto market is poised to continue its trend of growth.
Featured Image from Shutterstock Price tags: ethusd, ethbtc Charts from TradingView.com Top DeFi Coins Drop Despite Ethereum Rally: Here's Why
Originally from Bitcoinist.com https://ift.tt/2ZPzG1l
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