DeFi season

DeFi, or Decentralized Finance, witnesses phases known as "DeFi seasons" where significant activity and growth occur. These seasons typically align with broader market cycles in the cryptocurrency space. "DeFi season" often coincides with what's called an "alt season"—a period where altcoins (cryptocurrencies other than Bitcoin) gain substantially in value. During DeFi season, specific emphasis is placed on DeFi tokens due to their potential for high returns.

According to David Hoffman from the Bankless, after initial pumps in Bitcoin and Ether, attention often shifts to DeFi tokens, which are seen as undervalued compared to broader market caps. This leads to increased investment and activity within DeFi projects. The DeFi market cap, though relatively small compared to other sectors in the past, suggests substantial upside potential during these seasons 1.

Furthermore, during bullish market conditions, as seen in early 2021, DeFi indices like the DeFi Pulse Index can reach all-time highs, indicating strong performance against other major cryptocurrencies like Ether. This kind of performance signals the start of a robust DeFi season where investments in DeFi could yield significant returns 2.

To track DeFi season and anticipate its trends, watching indices such as the DeFi Pulse Index and observing their performance against major cryptocurrencies like Ethereum can be crucial. Such metrics often provide early indicators of arising DeFi seasons 2. This insight into market dynamics helps investors and participants in the DeFi space make informed decisions regarding their investment strategies.