DeFi vs Gaming. Who's stronger? Episode 2
Assets covered: DPI
Metrics used: Active Addresses, Holders Distribution, Age Consumed, Network Profit Loss
Previously in DeFi vs Gaming:
DeFi vs Gaming. Who's stronger? revealed a strong interest towards Gaming segment.
We could now have a closer look at DeFi, using DeFi Pulse Index (DPI) as a proxy.
1. Holders distribution
If we compare behaviour of holders from 100 to 1000 DPI with holders from 10k to 100k DPI, an opposite behaviour can clearly be seen. Big players tend to buy on downtrends. The crowd acts with delay. They are still excited (1) when whales already dumped (2), then they dump too (3), but whales already buying (4). A beautiful money circulation. Classic.
What do we see last days is that the crowd is not much excited to buy DeFi. No uptrend in yellow line. They are not convinced that this segment could perform well. Despite the growing price. This is actually a good sign. And it differs from the previous post bottom behaviour when the crowd was buying from the deep along with price (from June 28). Now the crowd is not convinced any more.
We could probably say that there is a relatively high chance of nice DeFi performance next days or weeks. At the very end, we are using this index, DPI, just to show a specific crowd behaviour.
2. Active Addresses
Price has grown by around 30% last week (1). DPI active addresses decreasing same time. It makes us suggest that DeFi is not that popular atm. This is also a good sign.
To compare, July synergy (2) is looking quite good: active addresses surging along with price. Now it is not.
3. Age Consumed and Network Profit Loss
See that spike / drop in the middle? Right around the bottom. Oh what a cool buy signal it could have been. That could probably be a well aged holder selling lots of his DPI with a loss.
Ideally, we would like to see another DPI price drop followed by a similar NPL drop. A potentially good buy signal when holders are losing faith.
Fact 1: Earlier, when DPI was dumping, the crowd thought it will recover, and bought more. Later, they were disappointed and closed DeFi index positions.
Fact 2: The crowd believed in first post bottom recovery in July and bought again.
But the current surge is being ignored. They are not convinced. They probably don't believe in DeFi.
Best to believe in something the crowd doesn't believe in.
We don't exclude that DeFi couldn't fall further. But taking into account a lack of crowd interest, even compared to previous surge, DeFi is probably worth considering. Especially when the crowd is massively in NFT/Gaming.
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.