This article is brought to you by a Russian Telegram channel "Antihype on money," an analytical channel about all economic hype trends and their triggers.
What happened: The Decentralized Finance (DeFi) market is the real hype of 2020. The aggregate trading volume on the largest decentralized exchange Uniswap has exceeded the volume of the centralized cryptocurrency exchange — Coinbase Pro. The yearn.finance (YFI) token has risen in price from $739 up to $39,000 in a month and a half by surpassing the bitcoin's all-time high.
Vitalik Buterin compared the DeFi market to the US Federal Reserve, which actively prints dollars in the hope of overcoming the crisis caused by the coronavirus pandemic. Indeed, the unhealthy excitement around the market almost always ends in the same way — a total sale, just like it happened with the ICO market back in 2017.
In fact: It is obvious that the DеFi market is in a bullish run. Investors fell into two main categories:
1. 1. Those who missed the beginning of the hype and now consider the market to be overbought, but are looking for opportunities to enter; 1. Those who made profits out of the growth, but afraid of leaving a promising market too early and miss out on profits.
What should investors do? Understand risks and diversify them.
EXANTE Co-Founder Anatoliy Knyazev believes hypes are fraught with risks of both a sharp rise and fall of individual tokens, so it is safest to invest in indices that include a basket of the most popular projects.
"In September 2019, we launched the DEFIX Index on the Nasdaq, based on the world's most promising DeFi projects. Even before the DeFi boom, it was clear how promising this topic was. And we were right — the index grew 3.5 times over the year," Knyazev added.
Search for undervalued tokens. STASIS CEO & Founder Gregory Klumov says it is worth drawing attention to tokens that are lagging behind in terms of dynamics, in particular, bZx Protocol (BZRX), Balancer (BAL), Amoveo (VEO).
"You can also take a closer look at the leader's forks such as YF Link (YFL) and YFValue (YFV)," Klumov highlighted.
It is likely that the DeFi market will be popular for a long time to come, although the growth leaders may change.
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