Are recent governance proposals and upcoming cross-chain support enough to counter the bearish compound market?
The rise of DeFi over the past year has resulted in the emergence of many crypto platforms that offer better services than their fiat counterparts. Perhaps the most famous among all of the DeFi lending platforms, Compound enables people to lend and borrow crypto assets using smart contracts and eliminating the need for middlemen. Based on the Ethereum network, Compound fuels its entire ecosystem via its native COMP token.
Compounds COMP already saw an upward trend last year, starting at a decent price of $ 148.8 in 2021 and quickly rising in value when DeFi really started. Its first big jump came in the early days of February when the token hit a price of $ 550 within two weeks. The next big uptrend came in April and stretched into May, with COMP hitting $ 905 at the time. It has been mostly in a downtrend since then, and at the time of writing, COMP is trading at around $ 333.
Since it will drop by almost a third in a few weeks, we’ll look at what forces are acting on Compound and determine its future prospects.
Compound price analysis
Exactly a year ago, COMP was trading at $ 97.64, a very moderate price. After rising nearly 3.5 times to $ 355.92 in just a few days, it went back and apart from a few jumps in August and September 2020, it didn’t move much in terms of price. The turn of the year heralded a boom at DeFi and Compound was quickly recognized as one of the best options and keen interest made it rise. It has pulled back to a high of $ 905 and is back at more or less 12 months ago ($ 333). Had you bought COMP at the beginning of the year and still holding it, you would not have seen any growth overall.
Where can I buy Compound?
Events That Could Affect the Price of Compound in June
What is in store for the DeFi platform as Compound continues to fall? Let’s look at some aspects that can and play their influence.
Crypto exchange listings
Compound’s COMP token was already available on some major cryptocurrency exchanges, but it was recently added by social trading platform eToro. This gives the token greater market access and helps to get people to invest in the token, which can be further used for agriculture.
In the first week of June, COMP was also added by Bitstamp in a promotional program where traders and investors can buy the compound token with no fees for the next three months.
Source: Compound Labs Twitter
Compound will be launching its newest service called Gateway in the coming months. This gives users access to a wide range of crypto assets, including those on other blockchain networks, potentially increasing the viability and usability of its COMP token as it opens up previously isolated markets in other large DeFi blockchain networks.
Compound is regularly introducing new investment pools, with the latest additions to TUSD and LINK in the past few months. As more are added in the coming days, this will drive more people to add the value of COMP.
Broader market sentiment
While there is a lot going on at Compound, the general market sentiment cannot be ignored. The broader market has been in a bearish mode for a few weeks now. The price spike in recent days was largely due to Elon Musk’s change in stance on Bitcoin acceptance for Tesla purchases, but how long it will take for bearish sentiment to overtake is an open question.
Compound price forecast
While Compound’s activity is always a good sign that the lending platform is actively working to offer more services and expand existing ones, the numbers game cannot be ignored. Let’s see what the technical indicators show and what can be analyzed from them.
Gov Capital uses its internal AI system to make accurate predictions and has a slightly grim outlook for the rest of June. In the next few days, the COMP could see a small decline, followed by another that estimates a monthly low of $ 134 (about a third of its current value). A rebound is expected in the final days of June, but estimates range from an optimistic $ 184.34 to a pessimistic $ 165.89.
The one-day candlestick and the moving averages from the Binance charts do not show a positive outlook either.
The 7- and 25-day moving averages are starting to converge as they reduce their falling values. This could indicate that COMP is stuck in a tight area. The large-scale 99-day MA shows a completely different value, but also appears to be flattening out.
This prediction is also supported by the MACD values. Both the 12 and 26 day values cross very closely and unless there is very positive news to trigger a return of interest in Compound, the crossings will continue within that range.
This is a prediction and the market can change at any time when positive or negative news is announced. What exactly needs to be followed are the upcoming regulations put forward by various nations and any major budget changes that may disrupt fiat strength and drive people to protect their investments as many compound pools offer higher interest rates than paper currencies .
Please note that the above article is a purely opinion-based post based on relevant available data. It should not be viewed as direct investment advice.