Yearn Finance (YFI) Analysis: Falls 5%, but is $44,000 Possible?

In two weeks, the Yearn Finance (YFI) price has more than doubled after sinking to a $7,451 low on Nov 5. 

At $26,730 (on Nov 21), YFI is one of the top-performing DeFi tokens. An almost perpendicular price expansion has seen bulls reverse losses of October 2020.

Even with a stellar performance in the last week of trading, there are hints of weakness.

For instance, despite the Ethereum price rallying above $500, the YFI price is down five, seven, and nine percent against the USD, BTC, and ETH, respectively.

Yearn Finance (YFI) Market Overview

Following sharp upswings in the last week, the Yearn Finance price is now oscillating within a narrow $4,000 range with caps at around $30,000.

Candlestick arrangements suggest possible bull exhaustion. The YFI bars are printing away from the upper BB. The result is a bearish divergence pattern from Nov 10. During this time, prices have been increasing amid tapering trading volumes.

Regardless, how prices react at key reaction levels–$24,000 to the downside and $30,000 to the upside, will determine the short-term trajectory of the YFI token.

Yearn Finance (YFI) Market Movers

In a rising tide, DeFi tokens benefit. At the time of writing, over $14 billion worth of assets is under management by different DeFi protocols. 

However, the positive correlation between ETH and DeFi token prices over the last few months is bullish for YFI holders. As the token price stagnates, the ETH price is trading at 2020 highs.

Therefore, odds of a rally above $30,000 could be on the cards. 

Specifically, the implementation of the YIP-54 allows for the open market purchase of YFI tokens to fund and incentivize developers.

Upon approval—garnering over 99 percent support from the community, the token price rose from $17,200 to spot rates. 

The Yearn Finance Treasury doesn’t mint or buy the YFI token. Therefore, the community approved their request to buy back the token from the open market and to incentivize contributors.

YIP-54 officially ties the value of the platform to its token, creating a skin in the game for contributors since part of the operations funding will be denominated in YFI.

Yearn Finance (YFI) Price Analysis

The Yearn Finance token price is in an uptrend.

Aforementioned, key reaction points lie at $30,000 and $24,000, respectively. Gains above this week’s high opens the way for $31k and possibly, $44k—the token’s all-time high.

For this, bulls must first break away from the current consolidation—clearer in lower time frames. Ideally, the close above $30k must be with high trading volumes preferably exceeding Nov 7 bar—data from Binance. 

Such a move will invalidate bear attempts and disqualify the bear divergence pattern that’s currently forming. In such a case, it may open YFI to $44k in the medium term.

On the flip side, reversals and break below Nov 19 lows could see the YFI tumble to the 50 and 61.8 percent Fibonacci retracement levels of the last two weeks trade range at roughly $18.5k and 15.5k, respectively. 

Chart courtesy of Trading View

Disclaimer: Opinions expressed are not investment advice. Do your research.