The market for cryptocurrencies experienced a lot of growth over the past week, with Bitcoin and Ethereum both seeing their values move closer and closer to new all-time highs. However, it is safe to say that the market for digital assets is no longer just about the top two cryptocurrencies in the market. DeFi coins such as YFI are registering significant gains on the charts, and this indicates that the market has expanded beyond just these two cryptocurrencies.
The price of YFI has increased by more than 520 percent over the course of the past six months. Despite the fact that this appears to hold a great deal of promise for the alternative, the truth appears to be yet another shade of grey. The price increase from more than 11,000 dollars in November 2020 to its current valuation of 48,415 dollars has not been as simple as one might expect.
YFI’s price has, like that of a large number of other alternative cryptocurrencies currently traded on the market, been volatile for extended periods of time. Having said that, taking into account the state of the market at the moment, how sustainable is the current price of YFI, and is it likely that we will see another short-term price correction in the near future?
It is interesting to note that data provided by Santiment highlighted that despite the bullish nature of the YFI market, there may be a bit of fear, uncertainty, and doubt (FUD) finally creeping into the market as the price continues to remain close to the $50k level. This was brought to light by the fact that the price continues to remain close to the $50k level. If this kind of scenario plays out, what YFI really needs for the price is a robust level of support, especially if pessimism is going to hit the market in the near future.
By taking a closer look at a selection of the most important fundamentals, one can gain a better understanding of the direction in which the price is likely to move over the next few weeks. According to data that was provided by Santiment, the amount of YFI that is available on exchanges has remained unchanged for some time and has not been growing. In most cases, fewer coins in exchanges is a positive indicator of hodling. However, in the case of YFI, if one were to look at past precedents, the price decline began as soon as the supply hit a stalemate. This is because there is a stalemate in the supply of YFI.
The analytics platform also mentioned that the current price rally started off with low on-chain activity for t
he coin, which is something else that was pointed out. On the other hand, over the course of the last few weeks, a trend reversal has become apparent, with on-chain activity noting an increase while the price continues to be inversely related to it.
There is always the possibility of price discovery, particularly as the price approaches its ATH (all-time high). At the time of the press, it appeared that YFI was lacking in this regard. According to the data provided by Santiment, the coin’s MVRV placed it in the danger zone, making it an ideal candidate for a new trend reversal, the likes of which can cause a price correction in the short term.
In the next few days, if the price correction does begin to take effect, the YFI price level of $44,000 may end up becoming an important support level for the coin. On the other hand, if this level is turned into a point of resistance in the weeks to come, a significant portion of the price increase and upward momentum that YFI has seen over the past few months may be reversed.
This will, once again, have the effect of causing the price of YFI to continue on its current trajectory, which means that the coin will be subject to significant ‘push and pulls’ at regular intervals.