Decentralized Finance (DeFi) began in 2021 by taking the cryptocurrency sector by storm and helping to get the bull market cycle into high gear as traders benefited from opportunities to easily trade cryptocurrencies and make high returns on their Hodl stacks.
Finally, high fees on the Ethereum (ETH) network and some strong market sales contributed to token prices and DeFi transactions falling from late February. However, that trend seems to have reversed over the past week as decentralized activity exchanges are on the rise again.
As can be seen in the graph above, DEX (Decentralized Exchange) volume spiked in late February, followed by a downward trend in the first week of April, with the total volume traded on all DEX falling to $ 603 million on April 4th.
The surge in users in mid-March was partly due to the surge in popularity of non-fungible tokens (NFTs), and the end of that frenzy has been marked by a steep decline in users between March 26th and March 27th.
Bitcoin dips ignite DEX activity
One possible explanation for the increase in DEX activity over the past few weeks is the comparison of the volume charts with the price chart for Bitcoin (BTC), which indicates a possible correlation between a decrease in BTC price and increased trading activity.
As the price of Bitcoin fell from April 6th to 8th, DEX volume began to rise and peaked on April 7th as BTC price bottomed out and prepared for a surge.
After peaking at $ 64,840 on April 14, Bitcoin price fell into a downtrend that continued through April 24 as the asset remained below $ 50,000.
DEX volume rose significantly from April 18 on the day Bitcoin saw a 16% price drop from $ 60,900 to $ 50,500. It has risen since then, suggesting that traders may switch from bitcoin to altcoins as the top cryptocurrency is working its way through a brief period of correction that traders are hoping for.
As can be seen from the graph above, daily DEX volume hit its highest level in weeks on April 22nd, when Bitcoin and the broader cryptocurrency market experienced a significant downturn, with total market cap falling by more than $ 324 million.
With Bitcoin now struggling to regain the $ 50,000 support level and much of the altcoin market now moving back to fire sell prices after the downturn from recent highs, the decentralized exchange activity could point to an upcoming altcoin season that historically points in one direction is looking in which Bitcoin is looking for a retreat from a new all-time high.
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