Key Metrics for DeFi Traders to Identify the Next Cryptocurrency Bull Market

Key Metrics for DeFi Traders to Identify the Next Cryptocurrency Bull Market


The Ever-Evolving DeFi Sector

The decentralized finance (DeFi) market has been a rapidly changing sector in the crypto space, outside of Bitcoin (BTC). The surge from a $1 billion to over $100 billion in total value locked (TVL) in decentralized finance protocols in 2020 underlines the sector’s exciting and volatile nature. However, the DeFi market has also experienced significant corrections, with the TVL dropping from $100 billion to $40 billion in 2021.

Important Metrics to Watch in the DeFi Market

Despite the market’s volatility, there are three key metrics you should look out for to catch onto sustained bullish momentum: total value locked (TVL), platform fee revenue, and the number of non-zero wallets holding tokens.

Increases in the Total Value Locked

TVL is a vital metric to gauge the overall health of the DeFi ecosystem, representing the total amount of cryptocurrency assets locked in DeFi protocols. An increase in TVL signifies growing demand and use of DeFi services, indicating a potential bull market. Despite a slight dip from the peak, TVL has risen since the start of the year, reaching over $45 billion.

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Increased Fee Revenue Points to Increased Usage and Interest

Protocol fees measure the fee revenue received by blockchains for completing transactions, reflecting increasing interest and usage in DeFi. In the past 30 days, the top 16 layer-1 blockchains by market cap have shown a positive increase in fees, with Ether (ETH) collecting over $2.2 billion when annualized.

Non-zero DeFi Wallet Addresses Rise

The number of non-zero addresses is a reliable indicator of increasing demand, signaling a potential bull market. The number of non-zero DeFi wallet addresses hit an all-time high of 1.1 million, emphasizing the growing participation in DeFi.

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Hot Take: Insights into the DeFi Market

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The DeFi market has seen ups and downs, from a major correction to a renewed surge in key metrics. By carefully monitoring these metrics, you can gain a better understanding of the DeFi market’s health and potentially identify the emergence of a new bull market.

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Key Metrics for DeFi Traders to Identify the Next Cryptocurrency Bull Market
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Coinan Porter stands as a notable crypto analyst, accomplished researcher, and adept editor, carving a significant niche in the realm of cryptocurrency. As a skilled crypto analyst and researcher, Coinan’s insights delve deep into the intricacies of digital assets, resonating with a wide audience. His analytical prowess is complemented by his editorial finesse, allowing him to transform complex crypto information into digestible formats. Coinan’s contributions serve as a valuable resource for both seasoned enthusiasts and newcomers, guiding them through the dynamic landscape of cryptocurrencies with well-researched perspectives. With meticulous attention to detail, he empowers informed decision-making in the ever-evolving crypto sphere.

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