Solana

Bitcoin

April

Terra

Avalanche

<div class="sg-post-des">
 TVL, fee revenue and wallet activity are just three metrics investors can use to assess the health of the DeFi sector.
</div>
<div class="cointelegraph">
 <p>The decentralized finance (DeFi) market has been one of the most exciting and volatile sectors in the crypto outside of Bitcoin (BTC). In 2020, the DeFi sector experienced a bull market that saw the total value locked (TVL) in decentralized finance protocols surge from $1 billion to over $100 billion. However, the DeFi market has also been prone to significant corrections. In 2021, the DeFi market experienced a correction that saw the TVL fall from $100 billion to $40 billion.</p>
 <p>Despite the volatility of the DeFi <a rel="noopener noreferrer nofollow" title="market" href="https://thebittimes.com/tag/market.html">market</a>, there are ways for <a rel="noopener noreferrer nofollow" title="traders" href="https://thebittimes.com/tag/traders.html">traders</a> to catch onto when the niche <a rel="noopener noreferrer nofollow" title="crypto" href="https://thebittimes.com/tag/crypto.html">crypto</a> sector begins to show sustained bullish momentum. Three of the most important <a rel="noopener noreferrer nofollow" title="metrics" href="https://thebittimes.com/tag/metrics.html">metrics</a> to <a rel="noopener noreferrer nofollow" title="watch" href="https://thebittimes.com/tag/watch.html">watch</a> are TVL, a platform’s fee revenue and the number of non-zero wallets holding tokens.</p>
 <p>Let’s dig in a bit deeper to explore how these metrics can be used to guage the health of the DeFi sector.</p>
 <h2 id="increases-in-the-total-value-locked">Increases in the total value locked</h2>
 <p>TVL is one of the most widely used metrics to measure the overall health of the DeFi ecosystem. TVL represents the total amount of cryptocurrency assets locked in DeFi protocols. When TVL rises, it suggests increasing demand and use of DeFi services, which can signify a bull market.</p>
 <p>While current TVL is slightly below the 2023 peak set on April 15 of $52.9 billion, it has risen since the start of the year. Since Jan. 1, TVL across the crypto market is up $7 billion, eclipsing $45 billion.</p>
 <figure><img src="https://cdn.thebittimes.com/images/2023/11/18/9fd159e295e53899825fdfd6d20fbc79.webp">
  <figcaption style="text-align: center;"><em>Crypto market TVL. Source: DefiLlama</em>
  </figcaption>
 </figure>
 <h2 id="increased-fee-reveunue-points-to-increased-usage-and-interest">Increased fee reveunue points to increased usage and interest</h2>
 <p>Protocol fees measure the amount of fee revenue received by blockchains for completing transactions. Layer-1 blockchains are a key part of the DeFi ecosystem, as they allow for the building of decentralized applications (DApps) in which users can interact without a centralized intermediary.</p>
 <p>When layer-1 fees are rising, it suggests that there is increasing interest in DeFi and that traders are utilizing DApps to interact with blockchains. In the past 30-days, the top 16 layer-1 blockchains by market cap all have shown a positive increase in fees. The 30-day fee total collected by Ether (ETH) is over $2.2 billion when annualized.</p>
 <figure><img src="https://cdn.thebittimes.com/images/2023/11/18/6451d81da768a7c0c2422d7615087b30.webp">
  <figcaption style="text-align: center;"><em>Layer-1 blockchain fees. Source: TokenTerminal</em>
  </figcaption>
 </figure>
 <p><strong><em>Related: </em></strong><strong><em>Breaking into Liberland: Dodging guards with inner-tubes, decoys and diplomats</em></strong></p>
 <h2 id="non-zero-defi-wallet-addresses-rise">Non-zero DeFi wallet addresses rise</h2>
 <p>The number of non-zero addresses is a good indicator of the number of people who are actively participating in crypto. When the number of non-zero addresses increases, it suggests that there is increasing demand, which can be a sign of a bull market.</p>
 <p>Non-zero addresses are a typically reliable indicator of demand as users are only likely to hold a crypto token if they believe that it will appreciate in value or actively utilize a protocol. Isolating statistics from the entire crypto market to focus on DeFi tokens, the number of non-zero addresses hit an all-time high on Nov. 8 of 1.1 million addresses. When looking at Nov. 8, 2020, there were only 267,180 non-zero wallet addresses.</p>
 <figure><img src="https://cdn.thebittimes.com/images/2023/11/18/12d9d0469d16b522ed7f73a65ec129db.webp">
  <figcaption style="text-align: center;"><em>DeFi Blue-Chip tokens. Source: Glassnode</em>
  </figcaption>
 </figure>
 <p><strong><em>Related: </em></strong><strong><em>Solana (SOL), Avalanche (AVAX) and dYdX produce double-digit gains as Bitcoin reclaims $37K</em></strong><em> </em></p>
 <p>The DeFi market has recovered and evolved since the Terra Luna implosion, but it is also volatile, so it is important to carefully consider on-chain metrics and other macro factors that can help identify bull markets.</p>
 <p>By watching these metrics, traders can better understand the DeFi market’s overall health and possibly get early signals on the emergence of a new bull market.</p>
 <p class="post-content__disclaimer">This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.</p>
 <template data-name="subscription_form" data-type="markets_outlook"></template>
</div>
<p>Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/3-metrics-defi-traders-can-watch-in-order-to-spot-the-next-crypto-bull-market-tbt70748.html">https://thebittimes.com/3-metrics-defi-traders-can-watch-in-order-to-spot-the-next-crypto-bull-market-tbt70748.html</a></p>

3 metrics DeFi traders can watch in order to spot the next crypto bull market

Table of Contents

TheBitTimes

Other articles published on Nov 17, 2023

Bitcoin to be Recognized as Legal Tender in Germany: Joana Cotar

Bitcoin’s bullish run: Key charts and catalysts for continued growth

JUST IN: SEC Delays Hashdex’s Spot Ethereum Application

Chainlink (LINK) Rallies Before Staking v0.2 Release – Can Price Push Toward $20?

The Bitcoin (BTC) Price is Rising, but What is Wrong?

The Challenges of Stability in Stablecoins

Join our free newsletter for daily crypto updates!