Sellers made a failed attempt to seize power in the Defi Composite index market last week. The test of $550-575 we wrote about in the previous article was at low volumes. And the result of checking buyers for strength was a sharp counterattack, which left a big pin on the weekly candle:
In fact, for 5 weeks the index price has been consolidating over the main liquidity zone of $700-735. Trading volumes are declining every week – the consolidation is coming to its logical ending. There are fewer sellers in the market, and buyers’ confidence in the continued medium-term DeFi composite index growth is increasing.
The daily timeframe reveals a little more information and shows the two main scenarios of the price movement by the end of December.
Two scenarios of the Defi composite index price movement
The chart clearly shows a symmetrical triangle, in which the price consolidates from 26 November. Four local waves of price movement have already been formed inside the triangle.
Thus, an unsuccessful attempt to break $700-735 will give birth to the first scenario of price movements. That is, a test of the mark of $600.
If the trading volumes and the price movement nature are similar to the previous waves within the triangle, the mark $600 will be the starting point of a new momentum with a target of $840-890.
Given the fact of the historical high update in the BTC market – all the attention of crypto and Defi space is now just on it. However, according to Defipulse.com, the amount of locked funds in the main Defi projects also exceeded its historical high.
The main credit for this event can be attributed to the WBTC project. It is based on Bitcoin and has grown by 30% since 12 December. This is a good signal for all crypto and DeFi markets regarding the global growth trend.
Though, while the BTC dominance is actively increasing – all the capital goes to it. To start the growth of other tokens, it is necessary for BTC to stop and correct.
If BTC consolidates at historical highs, there is a good chance that the second scenario of the index price movement will work. It is about the growth to $840-890 from current prices and without correction.
Changes among DeFi Composite index tokens
During this week, Binance did not add new tokens to the index. Over the past week, the ALPHA token stood out, showing growth by 40%.
Nevertheless, the weight of this token in the index is too small to significantly affect it. RUNE, UNI, BZRX ,BAL also showed good growth. Bullrun kings YFI and AAVE rested this week.