Yearn Finance (YFI) Slips Below $10K in DeFi Bloodbath; Breakout Ahead?
A splendid beginning for Yearn Finance in the third quarter is coming to an end with a brutal sell-off.
The yield farming aggregator suffered a major blow this week as its governance token, YFI, plunged by 39 percent. In the last 24 hours alone, the cryptocurrency experienced a 10.35 percent price decline, a move that also saw it taking a brief dip below $10,000 – towards $9,600 – before recovering back above the five-figure valuation.
But that did not take YFI out of its long-term downtrend. After topping out at $44,026 on September 12, the Yearn Finance token crashed by as much as 78.19 percent, hitting the low of $9,600 in just today’s session. Its move left traders guessing about whether the price would rebound ahead or would keep on crashing lower.
Yearn Finance risks crashing to $6,229, as per Cantering Clark's trade setup. Source: YFIUSD on TradingView.com
Yearn Finance Outlooks
Market analyst Alex said the YFI’s latest plunge came as a part of a broader decline across the alternative cryptocurrency (altcoin) market. Nevertheless, he anticipated the downtrend to pause during the US session should the stock market holds up in green.
“Alts died overnight,” wrote Alex. “Pessimism is accordingly extreme. Expect a strong bounce during the US session assuming risk holds up (i.e. no bloodbath in equity markets). Likely good for +10%. Not even YFI falls in a straight line (although the weekly chart disagrees).”
Meanwhile, chartist Cantering Clark dubbed YFI as the “forward indicator” of the overall DeFi market’s health, noting that its decline pointed to lower yields available across the liquidity pools.
“Yields across the board are going to dry up more, and yet still new traders are jumping into pairs now not realizing how many got in a poor position higher and are begging for a relief rally to sell,” – he tweeted on Friday.
Falling Wedge
As covered earlier, Yearn Finance’s downtrend left a trail of higher lows and lower lows behind, giving it an impression of a Falling Wedge structure.
Yearn Finance forms a Falling Wedge pattern. Source: YFIUSD on TradingView.com
A Falling Wedge is a bullish reversal pattern that begins wide but contracts as the asset’s price move lower. A bullish confirmation comes when the price breaks above the Wedge’s upper trendline, coupled with an increase in volume. That typically takes the asset as high as the maximum length between the Wedge’s upper and lower trendline.
That height is $23,210. It puts the YFI’s breakout target range anywhere above $30,000.
OhNoCrypto
via https://www.ohnocrypto.com
Yashu Gola, @KhareemSudlow
