When people talk about exchange outflow, they will often look at two or three of the top currencies by market cap. However, it is equally essential to analyze these withdrawal flows for altcoins and DeFi assets too. Unfortunately, a fair few of them are noting long-term lows in this segment.
YFI Exchange Outflow Dips Hard
As one of the more popular DeFi assets on the market, YFI – the Yearn.Finance token – notes a substantial decrease in exchange outflow volume. Although this asset sees highs and lows nearly every week, the recent dip is quite a step. Reporting a ten-month low at this crucial time for all crypto markets does not bode well for the future.
One has to wonder what would trigger such a decline in exchange outflow. Having less YFI on trading platforms will often prove beneficial as it can drive prices higher. However, there is clearly far less demand to withdraw YFI at this time, indicating more volatility may be right around the corner.
AAVE Withdrawals Go South
Another popular DeFi asset noting a pullback in overall exchange withdrawals is AAVE. An intriguing development, even though the multichain lending solution remains the most significant DeFi venture on the market today. It has lost nearly 18% in TVL over the past 24 hours, although that has primarily to do with the current bearish market. All assets are bleeding value again for no apparent reason.
That being said, AAVE has noted a decrease in exchange withdrawals for some time now. Reaching a seven-month low does not happen overnight, as this downtrend has been in place since mid-May 2021. Why fewer people would withdraw this asset from platforms is difficult to determine, although crypto users don’t always behave rationally either.
Even DAI Is Suffering
As the most popular algorithmic stablecoin in the cryptocurrency industry today, it appears that DAI is losing a bit of ground. 2. Although there is no real reason to move DAI off exchanges- except for DeFi purposes, perhaps – it makes this ten-month low all the more peculiar.
When even stablecoins start recording lows for exchange withdrawals or outflow volume, a rather intriguing situation occurs. TOo much liquidity across exchanges may not sound like a problem, but it can quickly turn into a snowball effect. The ongoing volatility is far from over at this point, and further price decreases for Bitcoin and other assets are likely.