The decentralized finance (DeFi) sector started 2021 by taking the cryptocurrency market by storm and supported the bull market strengthening further as investors looked for easier ways to buy and sell cryptocurrencies and generate high returns through staking.
While the high transaction fees and several sharp corrections in the Ethereum (ETH) network caused a decline in token prices and DeFi transactions since the end of February, this trend seems to have changed with the resumption of activity on decentralized exchanges (DEX) last week.
As the chart above shows, the volume of decentralized exchanges skyrocketed in February and then entered a downtrend until the first week of April. As of April 4, the total volume of all DEXs dropped to $ 603 million.
One of the reasons for the increase in the number of users seen in mid-March is the increase in the popularity of non-tradable tokens (NFTs). The end of the NFT craze can be seen in the sudden decrease in the number of users on March 26-27.
Bitcoin price bottoms boost DEX activity
A possible explanation for the increase in activity seen in DEXs in recent weeks can be found by comparing the volume charts with the Bitcoin price chart. This comparison shows that a correlation is possible between BTC price lows and increased DEX volume.
As the Bitcoin price depreciated between April 6-8, the DEX volume began to increase and peaked on April 7, when the BTC price bottomed and prepared to rise.
After reaching an all-time high of $ 64,840 on April 14, the bitcoin price entered a downtrend that lasted until April 24. DEX volume began to rise on April 18, when BTC declined from $ 60,900 to $ 50,500, a 16 percent correction. This shows that investors are moving from Bitcoin to altcoins during the correction period that they hope will take a short time.