Price Analysis

Compound Price Spikes 6% Amid Concerns of a Dysfunctional DAO

Compound price is experiencing a significant increase in activity as whales have become active again following the resolution of the recent governance attack.
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Compound Price Spikes 6% Amid Concerns of a Dysfunctional DAO

Highlights

  • Aggregated open interest (OI) for COMP surged 21% in the last 24 hours.
  • COMP price stabilizes as Compound reaches truce with crypto whale Humpy.
  • Technical indicators suggest COMP is bullish but with signs of weakness.

Compound price jumped by 6.4% despite a $25 million attack on its DAO governance. The dysfunctional Compound DAO was riddled with inactive members, which led to a sinister whale proposing and passing a $499,000 COMP grant for his team, the Golden Boys.

On-chain sleuth Ignas found out the problem also affected the Arbitrum DAO and noted that the issue of centralized DAOs is costly. COMP price hovered around $51.85 during U.S. business hours after the protocol reached a truce with crypto whale Humpy. COMP promises to surge even higher as bullish breakout confirmations form on its chart.

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COMP Metrics: Open Interest, Volume, Supply, Funding Rate All Surging

The Compound price has performed exceptionally well for a DeFi protocol that just lost $25 million from its treasury. According to CoinGecko, the daily trading volume is up 49%, signaling investors are taking an interest in the token.

Data from Santiment also shows that the COMP whales became active after the recent spotlight on the protocol. Additionally, on-chain volume and supply circulation surged to near-all-time high levels.

Compound On-Chain Activity | Source: Santiment

Coinalyze data shows the aggregated open interest (OI) for COMP surged by 21% in the last 24 hours, signaling investors are channelling funds into the asset. COMP’s positive funding rate shows the market is bullish on the asset.

The ratio of traders Long and Short dropped to 1.36, signaling that despite the good price performance, investors are betting the price may not stay up for long. The Long/Short ratio has dropped since March 13, when it established its yearly high at 2.94.

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Compound Price Analysis: COMP Breakout Eyes 72% Rally to $89

The COMP/USDT price chart shows a breakout from a falling wedge pattern, which typically signals a bullish reversal. The asset is trending below the 50-day and 200-day EMA, which provides some resistance above it. Since the breakout on July 15, COMP price has ranged between $52 and $47.

Compound Price Chart | Source: Tradingview

Key resistance levels for Compound price include $52 (50-day EMA), $55.95 (200-day EMA), and $89 profit target based on the breakout from the falling wedge. Conversely, if bears win the struggle, COMP may find support lower around $40.17, the most recent low.

The technical indicators suggest COMP is in a bullish trend but displays signs of weakness. The Relative Strength Index (RSI) is at 54.23, indicating moderate bullish momentum, while the Chaikin Money Flow (CMF) is at 0.14, indicating positive money flow and increasing buying pressure.

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Frequently Asked Questions

How did the attack on Compound's DAO governance occur?

The attack was facilitated by the inactivity of DAO members, allowing a whale to propose and pass a significant grant. This incident highlights the risks associated with centralized DAOs.

What impact did the truce with crypto whale Humpy have on Compound?

The truce with crypto whale Humpy helped stabilize the Compound price amid the governance turmoil, contributing to the bullish outlook.

How has the Compound price performed in the wake of the governance attack?

Despite the $25 million loss from its treasury, the Compound price performed well, hovering around $51.85 during U.S. business hours. The price is poised for further gains as bullish breakout confirmations appear on its chart.
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Evans Karanja

Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrency, and the video gaming industry. His extensive experience includes collaborating with various startups to deliver insightful and high-quality analyses that resonate with their target audiences. As an avid crypto trader and investor, Evans is passionate about the transformative potential of blockchain across diverse sectors. Outside of his professional pursuits, he enjoys playing video games and exploring scenic waterfalls.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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