Top decentralized finance (DeFi) coins such as Aave and Yearn.finance’s YFI have exploded higher over the past few days. Since bottoming last week when Bitcoin began to rapidly appreciate higher, top coins pertaining to DeFi have gained 100%.

The DeFi rebound has caught many investors off guard. There were many analysts that were saying that during this leg of the bull market, Bitcoin would likely be the outperformer that would take all attention away from all altcoins.

This seemed to be the case for a number of weeks as top DeFi coins like Aave dropped 60-80% from their summer highs, which were also their all-time highs in most cases.

Analysts are now trying to explain the rapid recovery of this market. One top investor in the space recently explained why he thinks DeFi has bounced back as fast as it did, with blue-chip names like Aave, YFI, and Synthetix Network Token (SNX) leading the way.

According to former Messari head of product Qiao Wang, now a crypto-asset analyst and DeFi investor, the strong rally is due to the lack of liquidity in the DeFi space to accommodate an influx of buyers:

“Recap of what I think happened. The mindshare of every informed alt player was on DeFi. But everyone was too afraid to buy on the way down. A game of chicken. Then everyone piled in on first sign of strength. Today many are still in disbelief. But all mindshare is on DeFi. The liquidity in DeFi is simply not big enough to accommodate all of them. Hence the massive high-volume V-shaped recovery.”

As he says, many remain in disbelief that the decentralized finance rally is back.

There remain many on Twitter saying that the strong rallies in the prices of AAVE, YFI, and other top tokens are simply “bear run rallies” or “dead cat bounces.”

As the fundamentals of this space improve, though, it is unclear if this is actually the case.

The fundamentals of DeFi continue to improve despite the fact that prices of assets like AAVE remain far below their all-time highs.

According to blockchain data, there is now $13.71 billion worth of value locked in decentralized finance applications. This is a new all-time high.

Three months ago, this metric was 50% of the current value. And at the start of the year, there was only $500 million locked in DeFi.

Bitcoin price in Telegram @btc_price_every_hour

344 +