Compound Protocol Token Maintains Uptrend

0
  • The compound protocol plays a role in DeFi through crypto lending.

  • The protocol runs on the Ethereum blockchain.

  • COMP gained slowly after breaking above a key resistance at $55.

Since breaking above the $55 resistance last month, Compound COMP/USD has had negligible gains. The cryptocurrency is trading at $61.7, slightly above support. However, the token remains bullish and investors should pay attention to the current valuation.

Compound was founded on the promise of revolutionizing the DeFi industry through crypto lending. Users deposit their crypto into a pool as deposits that are extended as interest-bearing loans. Depositors also receive cTokens, which are tradable and transferable.

Compound token gains are largely driven by broader cryptocurrency recoveries. Nevertheless, DeFi tokens are gaining popularity thanks to Ethereum’s planned move to proof-of-stake. Along with COMP based on the Ethereum blockchain, it is one of the tokens to benefit from spillover.

COMP holds above moving average and breakout zone

Source – TradingView

Technically, COMP is bullish. The token is retreating after making small gains over the past week. However, COMP has yet to break above the 50-day moving average since mid-July.

The MACD line crosses below the moving average, suggesting that the downside pressure may continue. COMP could retrace to the $55 level or the 50-day MA. Investors should watch the price action for potential buying of the token. COMP has the next resistance at $75 if the price holds above $55. The token presents a long-term buy-and-hold opportunity.

Final Thoughts

The Compound token is bullish despite the latest correction. The blockchain is likely to benefit from Ethereum’s early move to proof-of-stake. The $55 support remains the level to watch. The token could also initiate a bullish reversal at the 50-day MA.

Share.

About Author

Comments are closed.