Index futures for decentralized finance (DeFi) continue to collapse, erasing all gains since late June, as the sector cools off following a wild summer of speculation. 

On derivatives exchange FTX, perpetual futures for their DeFi index have fallen nearly 60% from their September high of $3,500, dropping to prices not seen since shortly after the new futures product launched at the end of June. 

On Binance, futures for a similar index have plummeted nearly 70% off its Aug. 28 high of $1,190, made the same day when the product started trading. Since its launch, the index has largely only traded downward, closing every week, except for three, at a loss.

A temporary respite may be near, however, offering investors a chance to recover and reevaluate the market, according to Alex Gedevani, analyst at Delphi Digital and former analyst at Barclay’s. The speed of the ongoing sell-off has simply caught many investors “off-guard,” he told CoinDesk. 

In Gedevani’s view, the altcoin market is “inching closer” to a capitulation event, at which point the sector can start to “gradually recover.” But a “fresh narrative” is needed to reignite capital inflows to the space, he added. 

Since the start of September, bitcoin has gained 18% and outperformed every top alternative cryptocurrency (altcoin) in the CoinDesk 20 index. In part, this performance is due to traders rotating investment capital from altcoins into bitcoin, as CoinDesk previously reported. 

Bitcoin has been a “black hole sucking up capital from investors looking to cash in on gains from the DeFi summer,” said Jack Purdy, decentralized finance analyst at Messari, in a direct message with CoinDesk. These investors picked bitcoin since it “appears overwhelmingly bullish amid this macroeconomic backdrop,” he said. 

Some DeFi projects won’t see a gradual recovery though. Newer projects launched this summer “without clear value propositions will continue to see downside” with investors consolidating into stablecoins or bitcoin, Gedevani said.