Blockchains and DeFi Lead the Way in Second Quarter – What’s Behind Their Growth?
Credit: CCN Hameem Sarwar.
Key Takeaways
- Blockchains and DeFi have been the best performers in Q2.
- Ethereum performed well, but its betas have declined notably.
- Who are the best performers within these two categories?
The second quarter has been bearish for the cryptocurrency market, leading to the deepest and longest correction of this bullish market cycle. Memecoins were hit especially hard, and several of them fell out of the top 100 largest cryptocurrencies.
With that in mind, some categories have performed better than others. More specifically, blockchains have fallen less than Bitcoin, while Decentralized Finance (DeFi) is not much further behind. With that in mind, let’s explore the best-performing categories for Q2 and leading projects within them.
Blockchains and DeFi Lead the Way
All outlined categories have declined between April 1 and July 1. The decreases have ranged from 7% to 62%. It is worth mentioning that during this time the Bitcoin price fell by 12%. So, blockchains (white) have outperformed Bitcoin with a decline of 5% smaller.
Next, the second-best performer was the DeFi category (black), which declined by 30%. Liquid Staking (purple), AI (yellow), and gaming tokens (orange) were the middle-of-the-pack performers, with declines between 40 and 50%.
The two categories that fell over 50% were Memecoins (red) and Ethereum betas (blue). Next, we will take a look at the best performers in the blockchain and DeFi categories.
Who is Leading the Way in Blockchains?
A closer look at the performance of blockchains shows that ETH and BNB are by far the top performers. Ethereum declined by 2% while BNB fell by 4%. Conversely, SOL, ADA, and AVAX declined by 24, 37 and 45%, respectively.
The Ethereum and BNB price charts also share some similarities. Both started upward movements in the middle of April which culminated with highs in late May/Early July. Then, during the ongoing corrections, they bounced at long-term horizontal support levels (green icons).
Additionally, the daily RSI moved outside of its oversold territory and generated bullish divergence, signs of a potential bullish trend reversal.
To confirm their reversals, Ethereum has to break out from its descending resistance trend line at $3,350 while BNB has to reclaim the ascending support trend line at $600. If that happens, both can move toward their all-time highs at $4,857 and $721, respectively.
Who Are the Top Gainers in DeFi?
In the DeFi crypto category, AAVE and UNI are the best performers, declining by 23% and 27%, respectively. SUSHI and SNX fell over 50%, while COMP showed a 38% decrease.
The price movement of UNI and AAVE is somewhat similar. Both have traded close to support since the middle of April. However, UNI has followed an ascending support line while AAVE trades above a horizontal support area.
Where AAVE and UNI differ is in the RSI reading. While AAVE has generated a bullish divergence, UNI has not, and its RSI still hovers below 50. So, the technical analysis for AAVE can be considered more bullish than that of UNI.
If an upward movement follows, the closest resistances for UNI and AAVE are at $10.80 and $90, respectively.
Unclear if Q3 Will be Similar
While the blockchain and DeFi categories performed admirably in a market correction, it is unclear if this will continue in Q3. The reason for this is that the best performers have not yet broken out from their main resistances, casting doubt as to whether the ongoing bounce is corrective or the beginning of a new upward trend.
Memecoins Slump in April, Layer-1s Resilient: Is Crypto Market Shifting?
