Yearn.Finance (YFI) is one of the most talked-about cryptocurrencies of 2020, both due to its scarce 30,000 token supply and its miraculous price increase to more than 1 BTC in value.
However, the DeFi token could fall to $15,000 or deeper if Bitcoin brings down the rest of the crypto market.
Yearn.Finance, Other DeFi Tokens At Risk Of Getting Dragged Down By BTC
All cryptocurrencies are on thin ice at the moment, watching and waiting in the wind for whatever top crypto assets Bitcoin and Ethereum decide to do next.
Bitcoin has thus far held strong above $10,000 for its longest stretch yet but has been unable to set a higher high from the 2019 peak. The risk of a lower low remains a dark cloud hanging over the market and one that may finally douse out the burning hot flames of the DeFi trend.
Related Reading | Yearn.finance (YFI) On “Life Alert” After Weak Attempt To Hold Support
DeFi tokens are what helped the crypto market rise up from out of the bear market lows and even the Black Thursday carnage. Growth in these tokens, such as Yearn.Finance (YFI) has easily outpaced other major crypto assets such as those mentioned above.
YFI rose from nothing to being far more valuable than even the top-ranked cryptocurrency and most dominant asset in the market, Bitcoin.
But now its at risk of falling back to more on par with Bitcoin, if the leading cryptocurrency by market cap decides to drop further.
Yearn.Finance YFIUSDT Head And Shoulders Target 50% Drop | Source: TradingView
YFI Head And Shoulders Could Confirm If Bitcoin And Ethereum Bring Down The Market
Bitcoin price dragging down the rest of the crypto market, DeFi tokens like Yearn.Finance included, YFI could complete a head and shoulders chart pattern that would send price nosediving back toward $15,000 or lower. But only “if” Bitcoin plummets, according to a crypto analyst.
The full height of the head of the structure, from neckline to peak, is roughly a 50% rise. A 50% drop as targeted by the measure rule, would take Yearn.Finance back to $11,000 per YFI token.
As pictured above, however, the right shoulder is currently incomplete and would require more downward sell pressure from bears. But after such a substantial drop already, and a low supply of just 30,000 YFI, there’s no telling what may happen if Bitcoin and Ethereum turn around instead.
Related Reading | Yearn.Finance (YFI) Flies 15% Percent From Local Price Floor, Fractal Targets $60K+
Demand would come roaring back into the DeFi space, and assets like Yearn.Finance would once again be set ablaze with positive price action. If this happens, due to how limited the supply of the token is, demand dynamics will take over and drive prices to new highs instead.
So while its certainly dangerous to consider the DeFi token suddenly straddling a thin line, buying here could bring returns a head and shoulders above the rest.
Featured image from Deposit Photos, Charts from TradingView
Go to Source
Author: Tony Spilotro