Yearn Finance’s governance token YFI resumed its upward trend on Friday as traders evaluated a high-profile investment in the asset management protocol.
On Wednesday, cryptocurrency firm Polychain Capital increased its exposure in the YFI market after purchasing an additional 141 tokens. According to Messari, the hedge fund purchased 329 tokens last month, giving it control of 1.6% of the total YFI supply, worth nearly $8.5 million at the time of this writing.
an optimistic outlook
The news prompted traders to increase their bets on the possibility of a near-term upside in the YFI market. The YFI/USD exchange rate rose 16% intraday to $17,781 as of Friday. The pair’s rise also came as part of a technical bounce that began last week when it was trading at $9,933.
The Yearn Finance token shows signs of bottoming out. Source: YFIUSD on TradingView.com
Cryptocurrency market OKCoin noted the influx of institutional funds into the decentralized finance sector, citing a broader rebound across tokens representing decentralized lending, asset management and oracle platforms. YFI added by OKCoin was the biggest beneficiary.
The token governs Yearn Finance, a protocol that maximizes the returns on user deposits by finding the most profitable liquidity pools. It started with a value of $30 in July, but rose to $44,000 by September 2020.
However, the tropospheric level did not last long. A series of negative media reports caused YFI to fall nearly 80%.read here). Nonetheless, the newly discovered bottom has given cryptocurrency funds like Polychain Capital an opportunity to buy YFI at lower interest rates.
Currently, hedge funds such as Three Arrow Capital and Framework Ventures hold YFI in their investment portfolios.
soft finance expansion
YFI’s optimistic outlook stems from Yearn Finance’s attempts to expand beyond wealth management and into the services sector. These include insurance, venture financing, decentralized exchanges, lending, and stablecoin products.
Meanwhile, a series of upcoming features such as low fees, support for Ethereum 2.0 (YFI is an ERC20 token) and the purchase of decentralized options have increased demand for Yearn Finance tokens from speculators and funds alike.