No DeFi Bubble, But Merely ‘a Blip’

Despite people arguing that a bubble is currently deflating in the decentralized finance (DeFi) space, the popular author and crypto venture capitalist Chris Burniske suggested remembering 2017 to get a better perspective of what a bubble really is.

Burniske, who is a partner in the crypto-focused venture capital firm Placeholder, argued that “bubbles are easy to spot,” and that the bull market during this summer hasn’t been one, but instead merely “a blip.”

Burniske went on to say that the sectors of the crypto space that showed the most strength during “the blip” are also going to be the strongest sectors in “the bubble” phase. “Not to mention, new sectors emerging, as so much was built during the quiet of the bear,” the investor added.

And while Burniske maintains that we haven’t had a DeFi bubble this year, data shows that the month of September “pretty much cut the DeFi sector in half,” as pointed out by a crypto analyst behind the popular Twitter account Ceteris Paribus:

Meanwhile, some users who turned bearish on DeFi tokens back in September now say they are starting to buy in the space again, calling current token prices “attractive enough:”

Have started to buy strong DeFi names with cash. Think 60-80% collapses from the local tops are attractive enough that it will be difficult for buying not to be +EV in a few months. https://t.co/jsLgPsfoc5

— light (@lightcrypto) October 7, 2020

Similarly, Ryan Selkis, founder of crypto research firm Messari, also wrote that he “might go falling knife shopping in the morning,” adding “UNEASYs looking like good entry if you’re a long-term DeFi bull.”

However, there are other ways to evaluate the current situation in the DeFi market too. Bitcoin (BTC) developer Udi Wertheimer now says that DeFi is “dead,” after having previously called the DeFi rally “small, insignificant and probably ultra-temporary.”

Finally, Su Zhu, CEO of crypto hedge fund Three Arrows Capital, also summarized his own view on DeFi today, saying that “you cannot will yields into existence. The real world is 0 yield.”

Zhu further added that BTC going up against the USD does not mean that DeFi tokens will also move higher or even remain at the same price. “Real BTC buyers are rebalancing versus fiat, gold, [and other] assets,” the crypto fund manager concluded by saying.

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Learn more:
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