Compound: Breaking Out

2021년 4월 16일

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With DeFi largely underperforming its peers over the past few months, it comes as no surprise that we're starting to see bullish momentum rotate back into the space over the past few days. This is evident when looking at DeFi's total value locked (TVL), which just jumped from 52.5B on Monday to today's reading of 59.8B. Compound (COMP) is among the various DeFi plays that appear to be regaining bullish momentum...

If you're not familiar with Compound, what you should know is that Compound is a software running on Ethereum that aims to incentivize a distributed network of computers to operate a traditional money market. Compound uses multiple cryptoassets to provide this service, enabling the lending and borrowing required without a financial intermediary like a bank. Put simply, Compound allows users to deposit cryptocurrency into lending pools for access by borrowers. Lenders then earn interest on the assets they deposit. Once a deposit is made, Compound awards a new cryptocurrency called a cToken (which represents the deposit) to the lender. Examples of cTokens include cETH, cBAT and cDAI.

Now, moving onto the technicals... Per the 1-day chart provided above, we can see that COMP punched through $555 resistance earlier today and climbed to an all-time high of $593. With COMP having traded between $400 and $555 since February, today's breakout appears to have bucked said trend. Assuming we see COMP close above $555, and turn said resistance into support, we could see COMP enter back into price discovery mode as DeFi heats up yet again. But as always, where BTC trends next will likely dictate whether or not COMP can push higher.