Yearn.finance’s YFI token has been facing some intense selling pressure today as the focus shifts back to Bitcoin.
YFI and other blue-chip DeFi tokens have posted some massive gains throughout the past few days, with the Yearn ecosystem’s token rallying from lows of $7,500 to highs of $18,000 over the course of an hour.
Other tokens followed in its footsteps and saw similar gains, with this revitalizing the aggregated DeFi sector.
Bitcoin’s sideways trading within the $15,000 region that took place concurrently with this upsurge was vital for these tokens to maintain their momentum as investors began shifting their attention away from BTC and towards higher-risk assets.
Today, however, BTC is once again pushing higher, with investors cycling their DeFi profits back into the benchmark cryptocurrency and placing some pressure on these altcoins.
One trader is pointing to the serious support just below Yearn.finance’s current price and negative funding rates as two factors that could suggest that this ongoing selloff will be fleeting.
Yearn.finance’s YFI Token Retraces from Recent Highs
At the time of writing, Yearn.finance’s YFI token is trading down just under 10% at its current price of $15,600.
This selloff comes close on the heels of the cryptocurrency retesting its $18,000 highs that were set directly after the rally from $7,500. The resistance here proved to be quite significant and contributed to the ongoing downswing.
Bitcoin’s break above $16,000 also appears to be hampering the price action seen by Yearn.finance’s YFI and other tokens, as investors are redirecting their attention back to the benchmark cryptocurrency.
Until BTC stabilizes and enters another consolidation phase, there’s a strong possibility that smaller tokens will continue facing larger inflows of sell-side pressure.
Analyst Eyes YFI Rebound as Funding Flips Negative
While sharing his thoughts on where the cryptocurrency might trend in the near-term, one analyst explained that Yearn.finance’s YFI is seeing funding flip negative despite it entering into a support zone throughout the $15,000 region.
As such, it may soon see a sharp rebound.
“Oh… So YFI is testing support and funding is going negative across the board? Allow me,” he said while pointing to the below chart.
Image Courtesy of Cantering Clark. Source: YFIUSD on TradingView.
Bitcoin’s price action will likely hold significant influence over that of Yearn.finance and other DeFi tokens. If the cryptocurrency stabilizes, then this ongoing DeFi selloff could prove to be short-lived.
Featured image from Unsplash. Charts from TradingView.