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The Compound token has been stable after a bear market
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Prolonged crypto winter and liquidity issues facing crypto firms remain a threat
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COMP token could accelerate weakness if buying strength remains weak
The Compound token (COMP/USD) looked poised for a sustained recovery in June. Since recovering from the June bottom price of $26, the token remained bullish, hitting $70 in August. Since then, weaknesses have brought the token down to $37. However, for 3 weeks, the cryptocurrency has been trading at the same level. We investigate if it’s worth calling for a buy trade at the crucial zone. But first, why has COMP been unable to replicate gains?
The Compound is a decentralised protocol that makes it possible to lend and borrow crypto. In other words, Compound takes away the role of middlemen in traditional finance. It allows financial services through smart contracts and in a decentralised manner. Coupled with the backing of the Ethereum blockchain, Compound grew as an important DeFi project.
A liquidity crunch impacting crypto firms has slowed the growth of DeFi and leading blockchains in the sector. The latest to fall victim in the sector is BlockFi. The once-popular crypto lender filed for bankruptcy on Monday. BlockFi joins the growing list of Voyager, Celsius, Three Arrows Capital, and FTX, which have faced bankruptcy.
The latest development may not be good cryptocurrency news for protocols such as Compound. Its native token, COMP, is consolidating ahead of the next move.
COMP battling $43 resistance amid price consolidation
Technically, COMP is consolidating in a bear market. The cryptocurrency lost the $43 level, which has now become a resistance zone.
The moving averages are bearish for the cryptocurrency and offer resistance above.
What next for COMP?
While consolidation at $35-$37 suggests that bears are getting exhausted, it does not signal a buyer’s activity. The cryptocurrency lacks the upside, with the resistance and moving averages above a stumbling block.
For the COMP price to go higher, the cryptocurrency must recover above $43. Otherwise, the June lows of $26 remain in sight.
Where to buy COMP
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Bitstamp
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The compound token has added 4% in a day as the price defies a bear market
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The protocol plays a role in the DeFi sector through crypto loans
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COMP trades at double its June lows with more upside potential
Compound COMP/USD has gained by more than 4% in the past 24 hours. The gains defy a largely bearish crypto sentiment. Markets are still reeling from a hawkish Fed tone amid faster rate hikes. With no specific factors influencing COMP, buyers could be finding it attractive at low prices.
COMP was trading at $60 as of press time. The price is more than double the low of $27 reached in mid-June. However, the level is significantly low compared to a high of $240 at the beginning of the year. The token’s all-time high remains around $915 as of May 2021. A combination of factors, including tighter economies and the Ukrainian war, caused the decline.
Consequently, investors are finding Compound attractive at low prices. In particular, Compound promises to revolutionize the DeFi sector with crypto loans. The nascent sector presents a massive opportunity, but it will take time before its full potential is realized.
COMP maintains a short-term trend, recovering support level
eToro
eToro is one of the world’s leading multi-asset trading platforms offering some of the lowest commission and fee rates in the industry. It’s social copy trading features make it a great choice for those getting started.
Bitstamp
Bitstamp is a leading cryptocurrency exchange which offers trading in fiat currencies or popular cryptocurrencies.
Bitstamp is a fully regulated company which offers users an intuitive interface, a high degree of security for your digital assets, excellent customer support and multiple withdrawal methods.
Source – TradingView
Technically, the Compound token trades at $56, which is now a support zone. The recent price pump has helped the token to rise above the 20-day and 50-day MA. The 20-day MA is about to close above the 50-day MA, confirming bullish momentum. The MACD indicator shows an increasing bullish momentum after a break above $56.
Concluding thoughts
The Compound token has the potential to continue rising from the current level. The token will face a minor resistance at $66. If the momentum remains, the key target for COMP will be $75.