A brilliant start for Yearn Finance in the third quarter comes to an end with a brutal sell-off.
The crop farming aggregator took a big hit this week when its governance token, YFI, fell 39 percent. The cryptocurrency in the past 24 hours alone had a price decrease of 10.35 percent, a move where it also took a brief dip below USD 10,000 – towards USD 9,600 – before rebounding above the five-digit valuation.
But that hasn’t got YFI out of its long-term downtrend. After peaking at $ 44,026 on Sept. 12, the Yearn Finance token crashed a whopping 78.19 percent to hit the low of $ 9,600 in today’s session. This move left traders guessing whether the price would recover forward or continue crashing lower.
Yearn Finance risks crashing to $6,229, as per Cantering Clark's trade setup. Source: YFIUSD on TradingView.com
Yearn Finance Outlooks
Market analyst Alex said the YFI’s latest plunge came as part of a broader decline in the alternative cryptocurrency (altcoin) market. Nevertheless, he expected the downtrend to pause during the US session if the stock market remained green.
“Alts died overnight,” wrote Alex. “Pessimism is therefore extreme. Expect a strong rebound during the US session assuming risk persists (ie no stock market carnage). Probably good for + 10%. Not even YFI falls in a straight line (although the weekly chart disagrees). “
Meanwhile, chartist Cantering Clark cited YFI as the “forward indicator” of the general health of the DeFi marketand noted that its decline indicated lower returns available in the liquidity pools.
“Yields across the board will dry up more, and yet new traders are jumping into pairs, not realizing how many got higher in a bad position and begging for a relief to sell,” – he tweeted on Friday.
As discussed earlier, Yearn Finance’s downtrend left a trail of higher lows and lower lows, giving the impression of a Falling Wedge structure.
Yearn Finance forms a Falling Wedge pattern. Source: YFIUSD on TradingView.com
A Falling Wedge is a bullish reversal pattern that starts broad but shrinks as the price of the asset gets lower. A bullish confirmation comes when the price moves above the Wedge’s upper trend line, coupled with an increase in volume. That typically costs the asset as high as the maximum length between the top and bottom trendline of the Wedge.
That high is $ 23,210. It places the YFI’s breakthrough target range somewhere above $ 30,000.