After outperforming Bitcoin (BTC) and Ether (ETH) strongly in August, Decentralized Finance (DeFi) tokens are now plummeting as many registered losses of up to 50%.

Cryptocurrency daily market performance snapshot

Cryptocurrency daily market performance snapshot. Source: Coin360

At the moment, the 2 coins garnering the most attending are Yearn.finance (YFI) and Uniswap (UNI) as both take dropped by 46% and 48% since reaching a monthly peak.

YFI/USDT 4-hour chart

YFI/USDT 4-hour chart. Source: TradingView.com

Three catalysts appear to exist backside the correction: Ether's pullback, turn a profit taking from BTC'southward previous rally and a strong sell off amongst DeFi-tokens.

Nigh DeFi tokens corrected by xv% to 25%

The overwhelming majority of DeFi tokens take dropped past xv% to 25% on the day. Even cryptocurrencies that are not directly considered to be DeFi tokens, like Chainlink (LINK), saw a xv% price driblet.

While the pullback of DeFi tokens coincides with the turn down in Ether price, a take-profit correction was expected by many analysts.

As an example, Yearn.finance has evolved into a dominant role player in the DeFi marketplace in less than three months. In the process, the price of YFI rose by one,200% on Binance to a peak at $43,966.

Uniswap'south native governance token UNI saw a similarly explosive upsurge in a significantly shorter period.

As Cointelegraph reported, Uniswap airdropped 400 UNI tokens to every user that used the Uniswap decentralized exchange before Sept. 1. At its tiptop at around $8.eighty, the 400 UNI tokens were worth $iii,520.

UNI saw a massive toll spike in a short menstruum because of multiple major substitution listings. Inside the outset v hours of launching, Coinbase Pro, Binance, and FTX listed UNI. Every bit a effect, the price of the token surged from $0.30 to $8.80 in less than five days.

UNI/USDT 4-hour chart

UNI/USDT four-hr chart. Source: TradingView.com

Due to the massive gains of DeFi tokens in their USDT and BTC pairs, a profit taking correction was widely anticipated but the intensity of this correction has many traders surprised.

Ether struggles to sustain momentum

Historically, Ether has led the rallies amongst altcoins, including DeFi tokens. In some balderdash cycles, Ether also front ran BTC cost. For example, from March to August, as Bitcoin toll recovered from the infamous Black Thursday crash, Ether cost strongly outperformed BTC.

However, Since Sept. 1, Ether has struggled to match the performance of Bitcoin. While BTC rallied from $10,300 to $11,100, Ether remained pinned below $400.

In the past xx days, Ether price declined past around 28% and in the same period, BTC recorded a 12% drop confronting the U.S. dollar.

Ether's short term weakness was probable caused by the increased selling pressure on DeFi tokens, hence the almost 50% correction from the likes of UNI and YFI over the past few days.

Bitcoin turn a profit taking kickstarted the DeFi correction

The sentiment around BTC's rally from Sept. 9 to Sept. 19 remains mixed. Interestingly, BTC alone saw a strong upsurge, while Ether, altcoins and the majority of DeFi tokens remained stagnant. This is somewhat atypical every bit usually when Bitcoin is range jump, altcoins rally, and when Bitcoin rallies moderately altcoins may lag but even so tend to follow BTC's bullish price action.

This short term inverse correlation between BTC and altcoins suggests that BTC saw a take-profit rally every bit investors cycled profits from DeFi tokens to BTC.