Yearn Finance loses 25% in five days; Other downsides in sight?

Yearn Finance loses 25% in five days; Other downsides in sight? - Yearn Finance lost 25Yearn Finance's YFI governance token took further losses in a bearish correction that saw its price drop 25% this week.

On Friday, the YFI / USD exchange rate plunged more than 5% to a low of $ 22.030, further foreshadowing its 328% price rally between November 5, 2020 and December 3, 2020. benefited from the volatility of the YFI to the upside decided to secure their profits. The sentiment has pushed the token unit prices lower.

A "conglomerate" in the making

This happened despite the growth of Yearn Finance's decentralized finance (DeFi) ecosystem. The distributed yield aggregator initiated strategic mergers with SushiSwap, Pickle Finance, CREAM Finance, Bitcoin system, Cover Protocol and Akropolis.

It seems likely that Yearn Finance's partnerships have prompted traders to increase their bids for YFI, a token that earns its value from the project's revenue and voting functions. Its price, therefore, has risen exponentially over a month-long period, only to see the upward momentum heat up. As a result, the YFI / USD turned bearish this week.

That said, the correction appears as a natural response to unstable growth of the moment. However, it doesn't take away from Yearn Finance's long-term growth prospects now that the project is emerging as a conglomerate in its own right.

"In short," Messari researchers Ryan Watkins and Jonathan Otto said in their recent memo, "while Yearn, the protocol, is a coordinating mechanism for efficient capital allocation, Yearn, the ecosystem, aims to be a conglomerate of symbiotic financial protocols that increase the capital efficiency of DeFi as a whole ”.

“The greater the capital efficiency at DeFi, the greater the opportunity for Yearn to scale its operations,” they added.

YFI price prediction

Yearn Finance is looking to become the DeFi industry hub for capital allocation if all goes well. And at the heart of the protocol's growth is the adoption of YFI, a sign that is now waning due to psychologically induced technical configurations.

In fact, YFI / USD has now confirmed that it is pursuing a head and shoulders trade setup. Traders believe the pattern is bearish, as it typically sends the lowest price up to its maximum height. With this logic, YFI / USD is now looking to extend its 25% correction move by another 30%. This brings its price target to around $ 15.200.

Meanwhile, support levels around $ 21.600 try to keep the price from continuing to decline. If they succeed, YFI could retrace its rally to the upside, reaching $ 28.555 before making a move to $ 30.000 and eventually its record near $ 44.000.