On the day of October 16, Bitcoin suffered a 3% decline when OKEx announced the temporary suspension of cryptocurrency withdrawals. Reports claim that the exchange has been investigated by Chinese police, however, the nature of this investigation is still unclear.
This news has certainly caused a wave of panic in the cryptocurrency market, causing altcoins to lose some of their value as well. Ethereum, the second largest cryptocurrency on the market, fell by 3,94% following the news regarding OKEx, and later encountered additional selling pressure that pushed the price down by 2,5%.
However, Ethereum had a secret weapon in its arsenal - decentralized finance, which helped the cryptocurrency recover from the second incident by bringing its price back to around $ 370.
DeFi or CeFi?
Market observers promptly assessed the extent of the impact following news of the OKEx investigation. While most of them have focused on crypto assets, others have shifted the focus to decentralized finance (DeFi) and how this could be an alternative to such events exposed to the attention of the markets.
Santiment founder Maksim Balashevich provided a graph highlighting DeFi's performance versus CeFi after the OKEx debacle. Uniswap's UNI token saw traders enter its business as soon as the news went public.
The UNI token took a hit initially due to market flow and ETH's reaction, but shortly thereafter it saw a notable recovery that was soon confirmed. When UNI showed a positive spike, many cryptocurrency users were surprised while others thought DeFi could be a "safe haven against centralized exchanges".
Market analyst @Akadosang tweeted: “BREAKING: the Investors in cryptocurrency they rush to the UNI token when they realize it is a safe haven against centralized exchanges. #DeFi has seen a wave of inflows with some DEXs surpassing Coinbase in volume ”.
An "imperfect logic"
However, bitcoiners and other cryptocurrency enthusiasts quickly called this narrative the fruit of "flawed logic". Traders argued that the UNI price was pumped to deflate as it dropped shortly after the news was published.
While the opinion of those who were in favor of decentralized exchanges over centralized ones, was summarized in the tweet of Udi Wertheimer who recalled that "Defi markets are 100 times easier to stop than centralized exchanges ... but don't let the facts affect you ".
The debate will continue as the market tries to become more decentralized and the question of whether “DeFi will solve this or that” may need to be tried and tested before making any final decisions.
