DeFi Revival Nears as Bernstein Sees Rate Cuts Ahead

• The current market capitalization of the DeFi sector stands at $67 billion as of this moment.
• The Bernstein forecast indicates a potential increase in market cap, bringing it closer to its previous highs.

According to a recent analysis by Bernstein, Decentralized Finance (DeFi) is expected to garner more attention from traders in the upcoming weeks.

Although the sector is still in the process of recovering from its lows in 2022, recent metrics indicate a promising rise in Total Value Locked (TVL).

Additionally, as traders get ready for a change in market dynamics, significant assets like Chainlink [LINK] and Lido Staked Ether continue to dominate the market.

DeFi set to draw in more traders

A new report from Bernstein indicates that Decentralized Finance (DeFi) could see an uptick in interest from traders in the near future.

Analysts Gautam Chhugani, Mahika Sapra, and Sanskar Chindalia note that the prospects of U.S. Federal Reserve rate cuts—between 25 to 50 basis points on Wednesday—could render DeFi yields more appealing.

While the total value locked (TVL) in DeFi is still at only half of its peak in 2021, it has recovered to $77 billion, doubling from its 2022 lows. Furthermore, monthly user numbers have increased three to fourfold since the market’s nadir.

Stablecoins have also regained traction, now valued around $178 billion, while the number of active monthly wallets remains stable at about 30 million.

DeFi market cap experiences a drop, but…

Data from CoinGecko indicates that the DeFi sector’s market capitalization is roughly $68 billion.

An in-depth analysis showed the market has seen a notable decline since April when the market cap was around $116 billion, leading to considerable losses.

Nevertheless, with Bernstein’s recent forecasts, a recovery in DeFi market capitalization could be on the horizon.

As interest in DeFi rises and favorable situations emerge, such as anticipated U.S. Federal Reserve rate cuts, the market may see a resurgence in the coming months.

Chainlink tops the asset market

Data from CoinGecko reveals that LINK maintains the second-largest market cap among DeFi assets, trailing behind Lido Staked Ether.

Lido Staked Ether leads with a market cap exceeding $22 billion, while LINK has a market capitalization of over $6.4 billion. Currently, LINK trades at approximately $10.60, reflecting a 0.8% increase.

Source: TradingView

Despite recent gains, LINK faced consecutive declines that drove it below its short-term moving average (indicated by the yellow line).

Although it briefly surpassed this resistance level on September 13, it failed to maintain the upward momentum, falling back below the moving average.

As DeFi gears up for renewed interest from traders, spurred by possible rate cuts and attractive yields, the sector seems ready for a recovery.

Even though the market capitalization has faced considerable declines since April, positive indicators like the doubling of TVL and stable user engagement suggest a potential rebound.