The price of Ethereum (ETH) has dropped from $488 on September 2 to below $380, falling by over 22%. If the correction of ETH continues, traders say decentralized finance (DeFi) tokens could further suffer.
Despite the rally of Bitcoin from $10,300 to over $11,000, DeFi tokens and Ethereum have underperformed.
The daily chart of Ethereum with key levels. Source: Flood, ETHUSD on TradingView.com
Some traders are considering the possibility of a take-profit rally, as investors funnel profits from altcoins back to Bitcoin. Coincidentally, the Bitcoin dominance index rose sharply in the past week.
A Drop Below $350 For Ethereum Gets Dangerous For DeFi Tokens
Since the first week of September, DeFi tokens were hit particularly hard.
The DeFi index perpetual futures on FTX has plummeted by 35% month-to-date, within merely three weeks.
The FTX DeFi index tracks various DeFi-related tokens, including Aave (LEND), Compound (COMP), and Kyber Network (KNC).
DeFi tokens have collectively underperformed, most likely due to the slump of Ethereum. Previous Bitcoin rallies were led by ETH. This time, Bitcoin is the only major cryptocurrency that is maintaining strong momentum.
If ETH drops below $350, a