DeFi Collapse Will Fuel A Historic ETH Rally: Analyst

One analyst is in the Ethereum news today for noting that there is a scenario with a DeFi collapse, which could fuel a historic rally for Ether (ETH). If you are following our news lately, you will see that the asset has been generating significant buzz across the crypto sphere over the past few days, mostly because of the explosive surge in the popularity of decentralized finance (DeFi).

As we can see, much of this popularity has been driven by an emerging trend which is called “yield farming,” where users can leverage different protocols in order to receive massive payouts. Some of them are as high as 200% APR.

The trend also led many DeFi related tokens to see massive uptrends, with COMP as one of the coins that  rallied by several hundred percent while others also saw parabolic surges. Now, a DeFi collapse could be the catalyst that Ether (ETH) needs to grow according to the analyst, mostly because of the bull market of DeFi which may soon come to a harsh end.

>$500 mln in market cap was created in the last 5 days for $COMP. Given the negative funding rates on @FTX_Official, I assume that these guys are not looking to HODL $COMP but more towards locking in yields. Expect a small pump in #ETH & #BTC when it all comes crashing down.

— Theta Seek (@thetaseek) June 22, 2020

As you can see from above, the analyst says that the current cryptocurrency news show ETH being stable. However, that could change soon and a potential DeFi collapse could help ETH rally and build a strong momentum with great profits.

Although this analyst only thinks that fading DeFi hype will fuel a small Ethereum pump, another prominent one explained that he believes it could spark a historic bull run mostly because of the “freshman bear market” which will happen with DeFi soon, “imploding shortly and feeding into ETH,” as he noted.

Ethereum is about to break out of its freshman bear market, like Bitcoin did 9 years ago.

Positive market sentiment is fertile soil for the future promise narratives that story assets like ETH thrive in.

The recent DeFi bull market will implode shortly and feed into ETH. pic.twitter.com/7UrV2uznXN

— light (@LightCrypto) June 22, 2020

The best way to track this in the near future and see if Ether (ETH) has a potential to benefit from a DeFi collapse would be to watch for an inverse correlation between the price of popular DeFi tokens and Ethereum. Only this could tell us how influential the decline of these tokens will be on the price of the cryptocurrency.

At the time of writing, the price of Ethereum (ETH) is at $242 with a 3.20% increase in what is seen as a good day on the crypto markets will greens all around the charts.