Although DeFi is still hot, it has actually entered a moment of high volatility

For every new development in the crypto space, enough has been written about the DeFi bull run.

From the KuCoin hack to the recent CFTC charge against BitMEX, every event has had a positive impact on the ROI (return on investment) of DeFi projects in the long run. However, in fact the short-term impact of DeFi is more relevant to traders.

Numerous retail traders have already invested capital in DeFi projects to increase their return on investment, and DeFi has been underperforming in most aspects of its performance over the past month. Projects like Yearn.Finance, Compound, and Chainlink saw ROIs of 500% by September. However, their return on investment dropped rapidly throughout September.

Considering the 1-day profit, among the top 5 projects, 3 of them have negative TVL (Total Locker Value).

According to DeFiPulse data, TVL has increased by 30% in the past 30 days. However, the increase in TVL does not indicate that DeFi projects are profitable.

The long-term returns of DeFi projects such as UMA and AKRO are positive. However, the 7-day and 30-day returns fell by 19% to a maximum of 67% in short-term returns.

The projects listed in the Messari chart are those with the lowest returns over the past week and month. However, the ROI of the entire DeFi ecosystem has seen a similar decline, which may be due to unfounded hype or lack of actual utility or application of projects in the real world.

As most facts show, every adverse event that happens in Bitcoin or the cryptocurrency space has a significant impact on DeFi, which may backfire in the short term. Tired of the lack of volume and falling prices of some altcoins on Bitcoin and spot exchanges, retail traders turned to DeFi, leaving their portfolios taking a hit.

Popular trader and industry opinion leader Hsaka tweeted the following amid the ebb of DeFi.

Perhaps the events of the past few days (Kucoin and BitMex incidents) support the long-term bullish story, but if you take off the rose-colored glasses, you will find that DeFi has been the most volatile area of ​​late, he said in a tweet.

DeFi has recently entered a large volatility range (systematic risk), with most projects returning -40% to -60%. While long-term prospects and forecasts are critical to every investment vehicle, it is also necessary to focus on short-term performance as this has a clear impact on a trader's portfolio.

And some top DeFi projects are also underperforming and losing ROI every day, so it is important to admit that we should rebalance our investment portfolio.

The original text comes from ambcrypto, compiled by the BluemountainLabs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.

The original text comes from ambcrypto, compiled by the BluemountainLabs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.