Many DeFi investors were likely caught off guard recently and are probably wondering how they should navigate their way forward. As usual, the narratives abound in regards to the direction of the market and a potential bottom. There are those who believe a bottom is already in at $25K. Others are looking to $23K and even as low as 9K. I personally don’t believe it will go that low but that’s under “normal” circumstances. One has to be aware and mindful of the fact that we are living in crazy times. March 2020 saw BTC collapse 50% in a single day. You really can’t single anything out, especially if you are making use of even modest leverage. Investors and traders can get rekt without prior warning.
Is It A Good Time To DeFi?
There are those who are now considering picking up DeFi projects, especially due to prices being so heavily discounted. One could also argue that the TVL has picked up across the board. This might be true but it is still down significantly since last month. Looking at the TVL on Defi Pulse reveals quite a significant knock, despite the slight rebound after the LUNA event. Actually, I would not even consider that blip a rebound to be honest. I wouldn’t be feeling very confident at this stage.
A similar scenario can be seen across the board. I tend to look at the market as a trader, in that I look for key levels. This often means that you miss “bottoms” due to waiting for some level of support, or reversal indicators signaling. It takes a lot of discipline to exercise discipline in the face of what appears to be a great entry point. It could always be the bottom but experienced market participants know how a bottom can just keep bottoming. That’s why waiting for reversal confirmations is imperative.
A Slow Start
I guess if one decides to modestly enter the market it is not too dangerous. Something that I would perhaps consider at this stage is CAKE. The token is currently under$5 and PancakeSwap is looking at ways to increase the yield, as well as reduce the emission rate. The current bounce above $30K will probably leave a lot of players feeling optimistic. I can’t however shake the idea that there is more pain to come. I would love to be wrong. These are just my thoughts and not investment advice.
For those looking to gain fresh exposure to the DeFi market, please ensure you have a well-thought-out approach and strategic response if the market decides to later whiplash. The best is always to find the safest way to go about risky endeavors.