Compound (COMP) token’s price action has been bearish since the start of 2022. According to CoinMarketCap, COMP declined more than 43% from $210.27 on 1 January to $115.07 at the time of writing (31 January). The current price is down more than 87% from the all-time high of $911.20, reached on 12 May 2021.
Similarly, DeFi Pulse reports that the total value locked (TVL) on DeFi protocols has decreased by more than 8%, from $86.24bn on 1 January to $79.07bn on 31 January. Compound has suffered an even more significant decrease, with its TVL falling from $8.89bn to $6.57bn, a decrease of more than 26%.
Can the compound token rebound in the coming months? Let’s consider the project’s fundamentals and latest developments to get a clearer view of a plausible compound crypto price prediction.
What is compound crypto and how does it work?
Compound is a DeFi protocol built on the Ethereum blockchain that facilitates the formation of money markets, which are pools of assets with interest rates generated algorithmically based on the asset’s supply and demand.
Borrowers and lenders of an asset interact directly with the protocol, earning and paying a variable interest rate without the need to negotiate maturity, interest rate, or collateral with a counterparty.
COMP is Compound’s native token. It’s an ERC-20 token that enables community governance of the Compound protocol and token holders can propose and vote on protocol updates using the COMP token.
Moreover, Compound rewards lenders with COMP tokens according to the number of cTokens in their wallet, as well as a variable interest rate dependent on the asset’s available supply. The lower the interest rate, the greater the market liquidity.
Users that lend their crypto assets to the Compound protocol qualify for loans in other cryptocurrencies, depending on the amount of collateral and the cryptocurrency’s presence in the Compound ecosystem. However, borrowers may be required to liquidate collateral if it falls below a certain maintenance level, and the interest rate charged varies according to the kind of collateral borrowed.
One exciting component of the Compound protocol is that it enables cryptocurrency owners to earn interest on their holdings or get a secured loan transparently and safely. As a result, Compound converts cryptocurrencies that are idle on exchange platforms into interest-bearing assets through its decentralised lending network.
Compound crypto news and price drivers
The project has undergone a number of significant milestones and developments, which may drive the compound token price.
Launch of Compound Fund by Bitwise
In November 2021, Bitwise, the world’s largest crypto index fund manager, launched Compound fund, investing directly in COMP, the native token of the Compound protocol.
The Bitwise Compound Fund is accessible to accredited investors for private placement subscriptions with a $10,000 minimum commitment and weekly redemptions.
“You’d be hard pressed to find a more dynamic and disruptive movement in financial markets today than DeFi. And one critical part of that space right now is Compound, which provides an efficient way for people to lend and borrow crypto assets — and whose community and governance have proven resilient,” said Matt Hougan, Chief Investment Officer of Bitwise.
Launch of Compound Treasury
Compound Network launched Compound Treasury in June 2021 to allow companies and financial institutions who are not crypto natives to take advantage of the Compound protocol’s benefits.
Compound Treasury created a product and fund flow that enables large holders of the US dollar to access the interest rates available in the Compound protocol’s USDC market. Treasury simplifies protocol-related complexities such as private key management, crypto-to-fiat conversion and interest rate volatility.
“Our vision is that Compound Treasury becomes the bridge for non-crypto financial institutions to deliver the core benefits of DeFi to the next billion users,” the company said in the press-release.
Compound Treasury has moved to a new, dedicated home on the web: https://t.co/Q0QZQ076g8
Access a fixed 4.00% APR on USD balances, powered by the Compound protocol ????
— Compound Labs (@compoundfinance) October 15, 2021
Launch of Gateway
In March 2021, Compound released a cross-chain interest rate market Gateway. It’s a Substrate blockchain that COMP token holders administer on Ethereum. Gateway’s objective is to allow users to borrow assets native to one chain (for example, ETH) with collateral from another chain (for example, DOT).
According to the statement, Gateway will expand into the cornerstone of a global interest rate market, suitable for supporting any asset, including forthcoming currencies, products and tokens.
Today, we’re proud to announce a prototype based on the Compound Chain whitepaper:
Gateway is a cross-chain interest rate market that allows you to borrow assets native to one chain (e.g. ETH), with collateral from another chain (e.g. CELO).https://t.co/kFzxnz9SWc
— Compound Labs (@compoundfinance) March 1, 2021
Listing on OKEx
OKEx, a cryptocurrency spot and derivatives exchange, announced the listing of the COMP token on its platform in June 2020, enabling traders to purchase and sell the COMP token.
Jay Hao, CEO of OKEx, said: “We are extremely pleased to be able to help foster the growth of the DeFi ecosystem alongside Compound. It is our belief at OKEx that DeFi will eventually disrupt traditional finance and provide equal opportunities for everyone to access financial services. This, in turn, helps us to realise our vision at OKEx, which is to #FinanceAll.”
COMP/USD price analysis
According to ICO Drops, the COMP token’s initial coin offering (ICO) took place on 15 June 2020 and has since returned a 12.62% ROI. Compare that to the 2,612.34% rise of LUNA, Terra network’s native token and the largest DeFi coin by market capitalisation, according to CoinMarketCap as of 31 January.
According to the earliest available price data from 2020, the COMP token gained popularity quickly after its inception, surging from $64.64 on 17 June to $337.05 on 21 June, a 421% increase in a matter of days. The price, however, plummeted more than 47% to $177.27 on 2 July and further collapsed to $87.64 on 3 November.
Since the onset of 2021, the price of COMP token was exceptionally bullish, reaching a high of $534.09 on 5 February before slumping to $346.53 on 24 March. The rally further resumed, and it reached the all-time high of $911.20 on 12 May. However, COMP token’s price crashed more than 62% to reach $342.96 on 23 May and bottomed to $221.85 on 21 June.
The COMP token rose approximately 130% between June and September, reaching $509.8 on 5 September before falling to $180.98 on 13 December. It closed the year at $200.29.
The global cryptocurrency market saw a bearish start to 2022, COMP token followed the broader trend dropping since the beginning of the year. It reached a 90-day low of $112.19 on 24 January. At the time of writing (31 January), COMP was trading at $115.07, with a market capitalisation of $752m.
Compound (COMP) coin price prediction: 2022, 2025, 2030
Short-term COMP sentiment from CoinCodex remained bearish, with six indicators giving bullish signals and 23 bearish signals, as of 31 January 2022.
All the daily and weekly simple moving averages and exponential moving averages as well as the volume-weighted moving average (VWMA) were giving ‘sell’ signals.
On the other hand, the Hull moving average (HMA), average directional index (ADX) and relative strength index (RSI) were giving ‘buy’ signals. The moving averages convergence divergence (MACD) kept neutral.
According to a short-term compound (COMP/USD) forecast by CoinCodex, it could reach $115.67 by 5 February.
Meanwhile, several algorithm-based forecasting services gave mixed long-term compound crypto price predictions as of 31 January:
-
Wallet Investor was bearish in its medium-term forecast, estimating the average price of COMP could reach $7.36 by the end of December 2022. Looking forward, it believed the token could rebound to $67.59 by the end of December 2025. Its five-year COMP/USD forecast suggested the price could decline again to $32.31 by the end of January 2027.
-
According to Digital Coin, COMP could hit an average of $157.3 in 2022, $185.16 in 2023, $242.77 in 2025 and $474.82 in 2029.
-
Similarly, Price Prediction believed the average price of COMP could hit $174.21 in 2022, $524.05 in 2025 and climb as high as $3,139.18 in 2030.
When looking for COMP/USD forecasts, bear in mind that analysts and algorithm-based predictions can be wrong. Their COMP projections are based on fundamental and technical studies of a cryptocurrency’s past performance. Past performance is no guarantee of future results.
It’s important to do your research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest money that you cannot afford to lose.
FAQs
Read more:
Rate this article
The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.
!function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};if(!f._fbq)f._fbq=n;
n.push=n;n.loaded=!0;n.version=’2.0′;n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];s.parentNode.insertBefore(t,s)}(window,
document,’script’,’https://connect.facebook.net/en_US/fbevents.js’);
fbqReInit = function(){
fbq(‘init’, ‘226746234435298’, {’em’: sha256(uEm)});
fbq(‘init’, ‘890935508482198’, {’em’: sha256(uEm)});
};
if(uEm){
fbqReInit();
}else{
fbq(‘init’, ‘226746234435298’);
fbq(‘init’, ‘890935508482198’);
}
fbq(‘track’, ‘PageView’);
