On the 18th midnight UTC+1, Yearn.Finance made an incredible jump of 13% within 1 hour of trading. Volatility was going through the roof, as increased demand for this specific token sent its price shooting high. Usually, when prices behave in a similar pattern, a short-term adjustment is due. Was this the case with YFI?
What is Yearn.Finance Token?
Yearn.Finance is an all-in-one service for decentralized finance (DeFi) enthusiasts, using tech automation to allow them to maximize profits from yield farming. Its goal is to streamline DeFi space for investors who are not technically minded or who wish to interact in a less technical manner than serious traders.
Launched in February 2020, the service, formerly known as iEarn, has seen a huge growth in recent months as new products started to emerge.
The platform makes use of various tailored tools to act as an aggregator for DeFi protocols such as Curve, Compound, and Aave, bringing those who stake cryptocurrency the highest possible yield. New features continue to be rolled out, these aiming, among other things, to help preserve the long-term value of the platform.
Yearn.Finance makes a profit by charging withdrawal fees, currently 0.5% at the end of September 2020, as well as 5% gas subsidization fees. Due to its governance model, these can technically be changed by consensus at any time.
The target market for Yearn.Finance is investors who do not have the time to study the increasingly complex DeFi phenomenon from scratch, or who wish to optimize their returns.
What happened overnight?
The price of YFI shot up 28% on the 17th of November 2020. On that same day, Bitcoin managed to break through the USD 17,000 price mark. Increased volatility in the crypto market was witnessed, mostly happening around midnight, where YFI’s price mostly increased by 13%.
This week was a very good week in general for cryptos, specifically for YFI, as its price-action behavior signals the end of the bear market and a start for a healthy uptrend.
Previous Midnight Similarities
Coming back to midnight increased volatility, most instances that happen in the cryptocurrency market happen at night. This means three things:
– Increased volatility happens when Asian markets start opening
– Increased volatility happens when US markets close
– Both of the above
It is most likely the third assumption, as it is a mid-point between continental markets. In Fig.3, we show a recent midnight price hike that happened earlier this month on the 7th of November 2020, around the same midnight hour.
Should you invest in YFI today?
After adjusting back to the 38.2% Fib level in Fig.4, we can assume that it is safe to enter the market now, as the current price of USD 23,272 is expected to go back to its previous high price of USD 30,000.
A sensible stop-loss price would be the 50% fib level of USD 19,877. YFI was included in our top 5 most attractive DeFi projects, so make sure to check out this article to diverse your DeFi portfolio!