YFI - Where are we going from here?

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Nov 19, 2020

Assets covered: Yearn.Finance (YFI)

Metrics used: Price, Social Volume, Network Profit Loss, Historical Balance, Coin Supply on Exchanges, Daily Active Deposits

Summary: YFI 's having a monster rally, is it time to chill soon?

Since our last post on YFI about a week ago, the DeFi darling have gone to do another +52.92.

YFI performance - Sanbase

Does it have more juice left in it to do another leg up or is it time to take a break?

Let's take a quick look.


YFI correlation with BTC - Sanbase

YFI's price remains fairly correlated to BTC's as all eyes are on daddy Bitcoin making new ATHs.

BTC's recent top out at $18,000s saw a -$1,000 candle that impacted pretty much every altcoin out there and YFI is not spared either. But as soon as BTC stablized, off to the races YFI went.

The question remains is whether we will see high volatility in BTC over the coming weeks or even a huge correction, if so, YFI is likely not to be spared from such a move. Other than that, it looks like YFI is free to move on.

Social volume

Social volume - Sanbase

Social volume appears to be in a healthy range with occasional spikes but nothing too crazy like the ones we have seen during the parabolic rise. The crowd is aware, some shilling is apparent but we are not in "sell your liver, buy YFI we are going to the moon" territory just yet....

Once a strong spike in social volume appears, it's usually a sign of crowd late comers and the top is in.

Perhaps we might hit that once price gets closer to $30,000?

Coin supply on exchange and Daily Active Deposits (DAD)

Coin supply on exchanges - Sanbase

Coin supply on exchanges continues to trend downwards, which is a generally a good sign as sell pressure is being removed. It also suggests that participants are willing to accumulate YFI even at current prices (i know it's insane).

This does not mean no one was really dumping, there is, but YFI demand seems to outweigh it for now.

Daily Active Deposits - Sanbase

With every new local price high in the current rally, DAD spiked as well, suggesting that there were a good amount of people ready to offload their YFI stash. And from the amount of unique addresses, it suggests that it's mainly the crowd doing so.

In a parabolic uptrend, the market tends to punish such eager dumpers from start to middle of the run, much like what we saw at the in July. Not a good idea to fight the trend at the moment....not until a long candle with strong signs of crowd euphoria.

Network Profit loss

Network Profit Loss - Sanbase

Network profit loss is seeing some bigger spikes lately and slight corrections have taken place with each spike (as we have seen historically as well). The latest spike should be the same as well.

However, it's worth noting that spikes are not as big as ones seen in the past, suggesting perhaps there might still a little more room before a huge blow off top and a heavy correction.


MVRV 30D - Sanbase

MVRV 30D have just entered into a zone where strong rallies have seen a correction historically.

Short-term investors/traders are having higher unrealized profits as the MVRV 30D inches upwards and profit taking is very likely soon enough.

Top Holders

Let's first start by looking at how the Top 10 holders look like one week ago:

YFI Top 10 holders a week ago - Etherscan

Here's how it looks like today:

YFI top 10 holders today - Etherscan

A new major holder has popped up in the top 10 since then, and it's the Maker YFI vault. On Nov 12, Maker went live supporting YFI as a collateral and the debt ceiling of $7M DAI was swiftly reached.

YFI debt ceiling - Makerburn

This effectively locks up 3.7% of total YFI supply and prevents shorting as Maker users are not able to borrow YFI from MakerDAO, unlike from Cream or AAVE. Instead, one could take the DAI and obtain more YFI from the market, further drying up the supply.

There's also a signal request to increase the debt ceiling for YFI on Maker.

Since Maker's YFI support, the price rallied... hard. There were also notable changes in the top holders due to this event.

YFI Governance saw a > 3% drop since.

YFI Gov - Sanbase

Meanwhile, the AAVE YFI Lending Pool saw a drop as well but recovered to its previous levels in 7 days.

AAVE YFI lending pool - Sanbase
AAVE YFI lending utilization - AAVE

YFI utilization rate has drop since the last post and suggests that shorters are weary of shorting it after being burnt.

Going forward

YFI continues to be in a uptrend with strong momentum pushing it to new local highs rekting anyone that sold previously.

There's certainly enough juice for it to push further but....

While it's a positive that a good amount of YFI is locked up in Maker to generate DAI, this growing confidence in using YFI , an increase in debt ceiling and further collateralization would be a strong concerning sign that's typical of a top formation (price will not fall, we will make it bros)

There are also other worrying signs popping up but nothing too serious at this point but it appears that we might be at the last leg of this rally before a healthy correction.

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.

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Nov 19, 2020

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