The decentralized finance buzz has finally started to cool off, but dip buyers are already over 90% net long on DeFi futures on crypto exchange Binance.
This says the market is incredibly bullish on these assets, however, mob mentality often leads to irrational decisions based on emotions. It also could be extremely dangerous for the crypto market, which has been overly greedy for some time now.DeFi Bulls Blinded By Green, Charge Forward Toward More Red
Check crypto Twitter or any cryptocurrency sub-Reddit, and there’s no avoiding talk of the current DeFi trend. Wealth is being generated overnight, and assets are rallying hundreds of a percent, one after another to no end.
One such asset even unseated Bitcoin as the most expensive crypto asset on a per-dollar basis. The success story is just one of many, however.
It has even promoted some crypto insiders to speculate on completely worthless assets, knowingly, to try and turn a profit. Some get burned in the process.
Related Reading | Why Are Small Cap Altcoins Outperforming Bitcoin And Other Major Crypto Assets?
How Being Overly Net Long Could Nuke Overzealos Crypto Dip Buyers
The cryptocurrency market Fear and Greed Index reaching extreme highs has the market revisiting discussion about contrarian trading. Top investors over centuries all advocated, as Buffett so eloquently put, being “fearful when others are greedy,” and vice versa.
Greed is blinding. When easy money is being made, there’s no time when investors are more exuberant and unaware of any reversal taking place.
At the peak of the crypto bubble, investors bought the dip, only to be crushed in losses. After the latest DeFi dip, could that be what’s next for crypto investors?Related Reading | How Fear and Greed in the Crypto Market Can Lead To Incredible Profit
on Binance futures is a sign that the market may be too bullish, and is presenting a more profitable contrarian trade for those who take the risk.
Trading itself is all about risk management, and risk to reward ratio. These crypto traders may learn the hard way that the risk is greater to the upside, and reward even more enticing on the other side of the trade.
