3 Metrics Defy Traders Can Look To Spot The Next Crypto Bull Market
The decentralized finance (DeFi) market is one of the most exciting and dynamic sectors in crypto outside of Bitcoin (BTC). In the year By 2020, the DeFi sector has experienced a bull market, with the total value locked (TVL) of decentralized finance protocols rising from $1 billion to $100 billion. However, the Diffie market is prone to significant corrections. In the year In 2021, the Diffie market experienced a correction that saw its TVL drop from $100 billion to $40 billion.
Despite the volatility of the DeFi market, there are ways for traders to catch up as the cryptocurrency sector begins to show sustained bullish momentum. Three of the most important metrics to watch are TVL, platform fee revenue, and non-zero wallet tokens.
Let's dig a little deeper to explore how these metrics can be used to determine the health of the financial sector.
The total value of the lock will increase
TVL is one of the most widely used metrics to measure the overall health of a reef ecosystem. TVL represents the total amount of cryptocurrency assets locked in DeFi protocols. When TVL rises, it suggests increased demand and usage of DeFi services, which may indicate a bull market.
While the current TVL is slightly below the 2023 peak of $52.9 billion set on April 15, it has risen since the beginning of the year. As of January 1, TVL has raised $7 billion in the crypto market, over $45 billion.
Increased fee income indicates increased usage and demand
Protocol fees measure the amount of payment revenue received by blockchains to complete transactions. Layer-1 blockchains are a key component of the DeFi ecosystem as they enable the development of decentralized applications (DApps).
As Layer-1 fees increase, it suggests that interest in DeFi is increasing and merchants are using DApps to connect to the blockchain. Over the past 30-days, the top 16 layer-1 blockchains by market cap have all seen positive fee increases. The 30-day payout of Ether (ETH) is over $2.2 billion per year.
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Non-zero DeFi wallet addresses arise
Non-zero addresses are a good indicator of the number of people actively participating in crypto. When the number of non-zero addresses increases, it indicates that there is increasing demand, which can be a sign of a bull market.
Non-zero addresses are typically a reliable indicator of interest because users only hold a crypto token if they believe it will appreciate in value or actively use a protocol. Isolating statistics from the entire crypto market to focus on DeFi tokens, the number of non-zero addresses hit an all-time high of 1.1 million addresses on November 8. As of November 8, 2020, there were only 267,180 non-zero wallet addresses.
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The Defy market has recovered and improved since the Terra Luna implosion, but it is volatile, so it is important to carefully consider chain metrics and other macro factors to help identify bull markets.
By looking at these metrics, traders can better understand the overall health of the DeFi market and perhaps find early signs of a new bull market coming.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
