The DeFi sector is experiencing a major recovery as the bulls appear to have returned to the market.
The biggest winner currently appears to be Aave (AAVE), which rose 25% in 24 hours.
Theories about what comes next are continuing to accumulate, with some even predicting a massive crash in the future.
The DeFi sector experienced rapid, steady growth throughout the year, especially in the summer of 2020, but as the summer drew to a close, it seemed that the DeFi sector was beginning to lose its strength. Total Value Locked (TVL) lost several billion from its ATH, and some even suggested that this trend might be over.
Fortunately, this is not the case, and interest in DeFi has once again risen sharply, with Aave (AAVE) being the biggest winner at the moment.
Since the DeFi bulls are finally returning, Aave seems to be one of the most popular projects this time. The price of the token has increased by 25% on the last day alone, making it the top performer among the top 100 by market capitalization.
This $AAVE return is legendary – Spencer Noon (@spencernoon) November 8, 2020
While the rest of the crypto industry has also seen considerable growth, even the top coins such as BTC and ETH have only increased by about 5%.
Different theories about what to expect next
As far as Aave is concerned, analysts believe that the brand is only just beginning and that there is still plenty of room for its further growth.
Given the technical indicators that show that open interest in the DeFi market is increasing, this could be bad news for anyone who has recently decided to short sell. Traders may have to close their positions to prevent the loss of capital, or simply continue to wait until they come to a short squeeze.
One theory of why this happens is that the reason is institutional money flowing into the DeFi sector. Large traders and fund managers have noticed that institutions buy crypto-currency in large quantities.
Others believe that the DeFi market is about to bottom out and that even an 80%-90% crash – which seemed unlikely in the past – may actually be a possibility.