Spurred by yet another Elon Musk tweet, the price of Bitcoin hit a 3-week high at $39,813 on Monday morning, giving a sizable boost to the overall crypto market.
The combined value of all cryptocurrencies is currently $1.67 trillion, with the tokens representing the decentralized finance (DeFi) sector being among the biggest gainers.
Aave (AAVE), the native token of the eponymous lending protocol, is up by 10% in the past day, surpassing the $319 mark earlier today. With a market cap of just above $4 billion, AAVE is currently the fourth largest DeFi asset, according to CoinGecko.
Earlier this month, it reached the number one spot in total value locked (TVL) in the entire sector.
Total Value Locked (TVL) in Aave. Source: DeFi Pulse.
According to data from DeFi Pulse, this value is as much as $13.04 billion as of today or more than 15% of the overall $60 billion locked in DeFi protocols. The runner-up Maker has $8.23 billion in TVL.
With a market cap of $11.84 billion, Uniswap (UNI) is the tenth-largest crypto asset in the world and the largest in the DeFi space. The governance token for the Ethereum-based decentralized exchange (DEX) has skyrocketed above $22.91. However, this move is still about 50% below an all-time high of $44.29 recorded on May 3.
COMP, the governance token of the Compound Protocol, reached $325.77 earlier today. However, once a dominant force in the DeFi space, currently COMP is only the fourth largest DeFi token and the 60th-largest crypto asset by market cap ($1.7 billion).
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While several other DeFi tokens, including Chainlink (+10.4%) and ThorChain (+13.4%), are faring well too, it’s interesting to observe that the latest move has also brought an unusually high correlation of AAVE, UNI, and COMP to the price of Bitcoin.
Most altcoins–with few exceptions–tend to follow the price movements of Bitcoin, but this has not always been the case with DeFi tokens, which often follow their own patterns. In the past, some experts even suggested that the prices of DeFi tokens would never end up following BTC.
However, according to data from CoinMetrics, the correlation coefficient of AAVE to BTC, which just three months ago was below 0.1, has soared to a local high above 0.6. Likewise, the correlation coefficient of COMP to BTC has jumped from 0.3 to 0.8 over the same period of time, while the correlation between UNI and BTC hit an all-time high at 0.68–an impressive growth from 0.1 at the end of March.
Correlation between Uniswap (UNI) and Bitcoin (BTC). Source: CoinMetrics
Despite the bullish rise for these tokens, with Elon Musk tweeting about Bitcoin again, there could be more unexpected price movements ahead–something that may also impact how DeFi tokens correlate to BTC.