Summary DeFi Technologies offers tactical trading opportunities, best suited for small, speculative portfolio allocations due to high volatility and crypto-cycle sensitivity. DEFT's business model spans five synergistic segments, generating both stable recurring revenues and market-driven, non-recurring income, with strong correlation to Bitcoin cycles. Technical analysis suggests entries on confirmed V-reversals or post-correction accumulation, emphasizing tight risk controls and short- to medium-term profit-taking. Recommend tactical entries on DEFT during corrections, aligning with favorable macro and crypto narratives, while maintaining disciplined position sizing and risk management. DeFi Technologies ( DEFT ) looks interesting as a candidate for tactical trades with tight risk control, using only a small slice of a speculative portfolio. In this article, we review its price action and discuss some simple quantitative frameworks to support our trading and entry decisions. DeFi Technologies is a Canadian company based in Toronto listed under the ticker DEFT on the NASDAQ. Its goal is to bridge the gap between traditional investment and the crypto ecosystem. This Canadian company has built a base of business models that have synergies with each other: Valour Asset Management: It issues cryptocurrency ETPs that can also be “baskets” and takes care of the purchase and custody of the underlying assets. It also uses these underlying assets in on-chain staking/lending protocols to generate returns. Earnings: collecting annual management fees that are prorated daily and are part of your recurring revenue. It also generates income from the rewards it receives for staking/lending the underlying assets. A higher AUM improves its margin by making its operations cheaper relative to the volume of profits it generates. DeFi Alpha: It is the trading leg of the group that mainly executes arbitrage strategies between CEXs and DEXs, both in derivatives and spot markets, taking advantage of price inefficiencies and temporary mismatches. To do this, it uses both group balance sheets and collateral (in crypto). Earnings: arbitrage spreads and basis. Stillman Digital: This leg is primarily a liquidity provider and OTC desk for institutional clients. Spreads in OTC transactions and fees in liquidity-providing transactions. DeFi Ventures: Invests in Web3 DeFi projects via traditional equity or tokens. Earnings: monetised when capital gains are realised on equity or tokens. Reflexivity Research: Finally, this business line provides crypto reporting and analysis for a diverse group of investors. Earnings: subscription model and ad-hoc research Technical Overview Since the uptrend began in 2023, DEFT has been one of the stocks that have benefited most from the crypto sector cycle, leaving spectacular returns for those who bought near the bottom and also for those who joined the trend.. However, whenever we look at ETFs, ETPs, or stocks that have a relationship with the crypto/blockchain sector, we must always bear in mind that they are cyclical assets, sensitive to narratives, liquidity, etc. But above all, you need to keep a close eye on Bitcoin, as it is the main proxy for the sector. DEFT Price Weekly (Trading View) In the image above, we have the weekly chart of DEFT, and we have highlighted the divergent signals that the asset would have given us with respect to the RSI. It's not a magic bullet, but it's worth monitoring these signals, seeing whether they line up with other indicators and with subsequent price action. Throughout the upswing, there were two significant downward divergences. In addition, within the first, an upward divergence is observed that resulted in a month with a revaluation of more than 130%. DEFT Price Weekly (Trading View) In the graph below, we highlight 3 relevant areas, in descending order: The upper area represents the resistance zone to be broken during bullish phases. The intermediate area represents the general battle zone, which has been both resistance and support. Finally, the lower area is a strategic point that has been resistance in the bear market and a zone of consolidation and accumulation in this last rally. In the current week, the upswing has defended the psychological price of $1. Taking into account only the price action as input, we consider two scenarios for potential entry points: V-reversal that exceeds the intermediate area (possible rejection at the upper resistance area) and retest this area for support. If confirmed, execute a buy order. Continue with the downward trend, down to the $0.50–0.60 area, where the next psychological level would likely be defended. In this case, it would be prudent to review macro narratives, liquidity, etc. If we are facing a positive environment, execute purchase action. Q3 Financial Statements Condensed Consolidated Interim Financial Statements (DeFi Technologies) DeFi Technologies seems to be keeping up the pace, and even though results were below last year’s $28.2M , it generated solid Q3 revenues of $22.5M. However, the core part improves with an increase in recurring revenue (excluding market gains/losses) of $4.6 M ($12.8 M vs. $8.2 M). Mainly, the staking and lending parts are improved with $7.4 M vs 6.5 M$ and $2.9 M vs $1.5 M, respectively. MANAGEMENT’S DISCUSSION AND ANALYSIS (DeFi Technologies) This increase in the recurrent share makes sense given that the (average) AUM of $950.7 million in the quarter exceeded that of the past Q2 772.8 million. Condensed Consolidated Interim Financial Statements (DeFi Technologies) Operating profit remains solid at $9.0 M, although down from $14.4 M in Q3 last year, and net profit after tax falls substantially to $3.9 M compared to $15.4 M as a result of lower trading earnings and a one-off financial expense of $4.7 M that comes from the costs of issuing warrants in the $100 M equity offering, as reported in the “Other Income (expenses)” section of its Management’s Discussion and Analysis report: MANAGEMENT’S DISCUSSION AND ANALYSIS (DeFi Technologies) These issuance costs, because they are linked to a liability (warrants), are recognized as an expense in profit or loss rather than against equity, and therefore cloud the quarterly earnings, even though the underlying operations were solid. Quant PoV Matrix Correlation & Normalize Price Performance (Node Analytica) Since DEFT's business model is linked to the crypto ecosystem, we seek to apply a way to quantify it and to see how much it depends on Bitcoin’s cycles as the main proxy. In the graph above, we have used daily price data for the DEFT, BTC, and ETH tickers from yfinance, on which we have applied a price normalization. After normalizing, we have created the correlation matrix and the graph with the series as a visual support. If we observe the series, DEFT behaves like a crypto-beta asset, and the trends are almost identical, and the correlation matrix confirms this strong co-movement, with a correlation of 0.85 between DEFT and BTC. Similarly, we have added ETH as a proxy for the rest of the “altcoins” assets, and although its core works more with these assets, the correlation is lower but still high. When working with a basket of cryptocurrencies, in bullish phases the AUM of the Valour segment increases, improving the commissions and the yields of the staking/lending part. On the contrary, when the scenario is bearish, the “hits” to the AUM are more painful because in this market Bitcoin commands, and when it corrects, the rest of cryptocurrencies do it in greater magnitude and then take longer to recover, if at all. Quant Stats (Node Anlaytica) Additionally, with the data of daily prices of BTC and DEFT, we have calculated the daily returns and, from there, the Sharpe ratio, max drawdowns, annualised volatility, etc. Over the period analysed (2021-01-22 to 2025-11-27), the Sharpe ratio is favorable for DEFT, but at the cost of very high annualised volatility of 136% and an extreme drawdown of -98.1%. From a quantitative point of view, DEFT is still linked to industry-specific cycles and volatility and has similar numbers to an altcoin or token. Operationally, entries should be tactical, taking positions when the asset pulls back and offers buying opportunities, but only as long as it is aligned with favorable macro- and crypto expectations. Likewise, it would make sense to allocate only a small slice of the portfolio’s speculative sleeve to this name and look for returns in the short and medium term. Conclusion DeFi Technologies is building, through its five business lines, a solid foundation with core business models that generate stable, recurring income and others that provide substantial but occasional, non-recurring revenues tied to trading performance and market momentum. This is important because, given its reliance on and correlation with crypto cycles, the company should still maintain a revenue stream in bear markets. From a technical point of view, the operational idea is to confirm this V-reversal or wait for the capitulation to be completed and an accumulation structure to be formed to enter. Quantitatively, the asset has offered great return opportunities but with very high volatility and steeper falls than Bitcoin, more typical of an altcoin. As we mentioned earlier, small position sizes aim to take profits in the short to medium term from a speculative point of view. Finally, the recent rise in expectations of interest rate cuts in December, the One Big Beautiful Bill Act, the treasury announcing the increase in issuance of T-Bills , the end of QT, etc. These are narratives that, from our point of view, are favorable to provide another boost to the upside of the markets, in the coming quarters. In short, our recommendation is to take advantage of the opportunities offered by this correction, waiting for confirmations and making tactical entries.
