Bitcoin correction is heralded as a “BTD” opportunity, but what about DeFi?

Cryptocurrency investors are still picking up pieces from the implosion of the entire market on May 19, when Bitcoin (Bitcoin) Fell to unexpected lows $30,000. Post-mortem analysis now shows that a record 10,525 BTC cleared by all exchanges due to the cascading sell-off, the correction has spawned a frantic sprint for exiting traders.

Altcoins quickly followed suit because they joined the collapse of Bitcoin, and almost none of the tokens was dragged down by the downturn. Because of the flooding of the entire market, the total market value decreased by $437 billion to $1.672 trillion. The lowest level since April 25.

Decentralized finance (DeFi) has been hit particularly hard, because many lending agreements provide users with quick loans and other forms of leverage.

Use Bitcoin and Ether (ETH) Occupies a large part of the funds locked in such agreements. According to the data of Defi Llama, the rapid decline in its price has led to a similar decline in the TVL of the entire DeFi sector, which fell by 21.5% to 114.15 billion US dollars.

According to DeFi Llama, the AAVE lending platform is currently the highest-ranked DeFi platform by TVL, and its TVL has dropped by 16%, while the price of AAVE tokens has dropped by 26% to $460. At the same time MakerDAO (MKR) (The second-ranked platform)’s TVL fell by 26%, and the value of MKR tokens fell by 16.​​5%.

It’s not just DeFi lending platforms that have been hit. The TVL of Uniswap, the top-ranked decentralized exchange (DEX), fell 17.4%, and its token value fell 26% to $25.60, the lowest level since early March.

Uniswap’s direct competitors SushiSwap (SUSHI) and PancakeSwap (CAKE) have experienced similar declines in TVL and token prices. The price of CAKE has fallen by 25% and the price of SUSHI has fallen by 30%.

Of course, without the intervention of some evil participants, there will be no complete market downturn, just like the unfortunate case of Binance’s smart chain-based VXS loan platform. The agreement was subjected to a series of price manipulations, which resulted in the settlement of DeFi worth more than US$200 million and bad debts of more than US$100 million.

1/9

Today, we witnessed the manipulation of the XVS price-the management token of the Venus protocol on BSC.

The incident led to more than $200 million in DeFi liquidation and more than $100 million in bad debts.

As always, let us analyze this situation below​​ pic.twitter.com/pAnjqHI25T

-Igor Igamberdiev (@FrankResearcher) May 19, 2021

Due to the attack and the overall market downturn, the XVS price fell by 50% to a low of $55, while the total value locked in the agreement fell by 46%.

In the course of a few days, the market went from chatter about the possibility of “DeFi 2.0 Summer” to enthusiasm on the street, and worries about the upcoming multi-year bear market. This is just the latest example of why investors should not feel too comfortable with the cryptocurrency market, as the situation may change.

Despite the current economic downturn, DeFi’s transformation journey to reshape the financial market has just begun. For those who are brave enough to think about Warren Buffet’s famous investors, this correction may provide them with a rare opportunity. The bull market buying opportunity urges investors to take the following actions:

“Be greedy when others are afraid, and be fearful when others are greedy.”

The views and opinions expressed here are only those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading action involves risk, so you should conduct your own research when making a decision.