Data: Ethereum DeFi is heavily undervalued, even at $13b aggregate market cap

Even after a 20-30 percent correction from the recent highs, Ethereum decentralized finance coins are up hundreds of percent in 2020 alone.

"A basic trading rule is that when parabolic advances break, you don't look to buy until most of the parabolic move is reversed. In BTC tops, that's meant waiting for 75%+ dips. In alts, 85%+. BTC had a clear parabola in 2017. A less clear one in 2019. Defi just had one burst."

One analysis of market data suggests that at the moment, DeFi coins are actually undervalued as their underlying platforms see drastically increased usage despite the consolidation seen in the market.

Is DeFi overvalued? Data shows it might actually be undervalued.

According to an analysis shared by Jeff Dorman, a Wall Street investor turned CIO of Arca, compared to where DeFi coins were last month, they're extremely undervalued.

The analysis shows that while most DeFi coins like Maker's MKR, Aave's LEND, Curve's CRV, and others are down 20-50 percent in the past month, the revenue these protocols are generating is up dozens to hundreds of percent.

While DeFi coins may be relatively undervalued to where they were last month, that doesn't mean that their parabolic ascent will continue right now.

Rew Kang, the founder of DeFi-focused crypto fund Mechanism Capital, recently noted that there's a good likelihood this segment of the market enters a period of consolidation.

We're definitely not at the 2018 stage of the market where we see a long bear market.

He cited the fact that "The innovation and pace of development continues forward at a blistering pace" while there are large swaths of capital entering the space through new funds or through new demographics dabbling in Ethereum and DeFi.Posted In: Ethereum, DeFi.