COMP/USD Technical Analysis
About Compound (COMP)
Compound uses the Ethereum network to power its decentralized software. COMP is its native token, which is paid out as an incentive for Compound users who benefit the network. It’s also a fully tradable crypto coin that is available in multiple cryptocurrency exchange platforms.
Compound uses a DeFi protocol that allows for automated lending and borrowing. Compound has the ability to turn multiple crypto assets into collateral, permitting those using the Compound protocol to create lending pools. Other users can borrow from those pools while the lenders earn interest. By depositing money, users can earn cryptocurrency awards, called cTokens, issued by Compound.
These tokens can be traded and transferred freely, and all transactions are protected by smart contracts. So, the Compound network is a way to connect lenders and borrowers, but out of that has emerged cryptocurrency called Compound (COMP) that competes against other cryptos on the marketplace. Compound attempts to move beyond the idea of simply holding crypto coins in a wallet and doing nothing with them, instead offering Compound protocol users a way to earn money on the Compound tokens they already own.
When looking at the cryptocurrency market rankings, Compound is way down the list at #2469. It's remarkable not for how it competes with the other cryptocurrencies but how it provides powerful lending and learning tools for cryptocurrency users. Investors can purchase a different kind of cryptocurrency and then trade it for Compound, deposit that, and earn money on it.
Compound currently has a market cap of $15,423.65 and a very low trade volume. Compound is not meant to compete on the cryptocurrency market, at least not yet. It's not what we would consider to be a primetime player among cryptos, because it is more about the utility as a lending and earning tool rather than a global currency.
Compound takes the common idea of decentralized finance and incentivizes it, which is what really makes it stand out. It's more than just a lending token, though, as it also functions as a governance token. So, those who hold Compound tokens can vote on what happens with the Compound protocol and how it moves forward. There's a lot to look forward to with Compound, and it's a crypto to watch because of its potential for future growth.
The decentralized network Compound was started by Robert Leshner and Geoffrey Hayes. These entrepreneurs reached out to several capital firms in 2018 to raise funding. They've managed to raise 8.2 million dollars that first year and then $25 million the next year, adding in new investment partners. After this initial success, some of the COMP currency shares were given to company investors and network developers.
As a cryptocurrency, Compound hasn't done very much. The only time the Compound price went above $0.009 was in February of 2021. It shot up to $0.07381 (COMP/USD) but then took a dive down to $0.0000004783 in a few days.
It was also hit really hard by the economic downturn in March, suffering more than most cryptos in that period. It suffered a 75% drop around that time. Compound has spent much of 2021 falling, though, with its one spike seen as a blip and not necessarily an indication of future bullish tendencies.
Despite a poor cryptocurrency performance, the Compound network has done fairly well for itself, proving quite popular among lenders and investors.
Compound Price Factors
Like most cryptocurrencies, there are a few different factors that affect the COMP rate. Compound has billions in locked assets, and it is an attractive lending and investment platform. As investors flock to the crypto, they can affect the COMP price with their interest. What happened during the end of January and early February of 2021 with the rates spiking so quickly was attributed to new interest in investing from established cryptocurrency traders.
As word spread about what Compound offers, a lot of people moved to the platform, but many of them pulled out when they saw that they weren’t getting the gains they wanted very quickly. It has been speculated that the interest in GameStop stock for a short period of time affected cryptos like Compound.
Cryptocurrencies are also affected by economic factors. As the economy struggles, fewer people are likely to put money into risky investments like cryptocurrencies, especially less popular ones like Compound. During times of financial security and economic boom, people often have extra money that they look to invest, and they may see Compound as a future earning opportunity.
The COMP chart often shows movement related to economic events, legislative changes (related to cryptos), and the rising or waning popularity of the Compound network.
Anyone looking to invest in Compounds or other cryptocurrencies should know that they have a tendency to be extremely volatile. The Compound price can change drastically from day-to-day, with little to no warning.
It's a good idea to research Compound before investing in it, using the expert analysis and other professional tools available on FX Leaders. Potential investors should also watch news stories and economic events that could affect the Compound price.
Compound can be traded on some of the major cryptocurrency exchanges, although it's not listed on very heavy because of its below overall ranking among cryptocurrencies That could change in the future if it becomes more popular, but for now it can be quite difficult to purchase Compound through the same platforms that you may purchase other cryptocurrencies.
If you watch the Compound chart, it's easy to see how volatile this crypto can be. In the past, it has fallen by 75% in a single day, and then risen 20% another day. There's plenty of opportunity for serious profit or substantial loss, which is why any investor should be very cautious before they buy or sell Compound.
COMP/USD - FAQs
Compound is a decentralized network with the proprietary token called Compound (COMP). The Compound network operates in conjunction with Ethereum and offers a way for digital asset holders to lend or borrow, with lenders earning income over time. The crypto coin Compound can be treated like any other cryptocurrency, and like other cryptocurrencies, its value can change erratically as well.
Compound can be traded on a few of the major cryptocurrency exchange platforms, like Kraken. It can also be purchased through the Compound network. There are only a few places where Compound is available to trade at this time, however.
Compound token holders can store their tokens in a digital wallet, either on the Compound network or on a cryptocurrency exchange platform. Cold storage wallets are available for offline storage as well to protect the currency from being stolen or hacked.
Compound can be traded for other cryptocurrencies on a crypto-currency exchange platform. It can also be used as an investment tool, deposited into the Compound network and lent out to other Compound users, earning interest in time.
Compound can legally be purchased in most countries around the world, but there are few that ban cryptocurrencies outright, which would include Compound. Cryptocurrency is currently banned in Bolivia, Ecuador, Colombia, China, and a few others. Russia is one of several countries that prohibit cryptocurrency being used for payment but allow it as an investment option. The laws surrounding cryptocurrency are always changing, with new laws coming down the pipeline, which means that the legality of buying Compound in certain countries could change in the near future.
There's no regulation for Compound in the UK other than for money laundering. This may change, however, as new laws are being developed that could affect UK regulation related to cryptocurrency.
It can be very risky to trade Compound or any other cryptocurrency due to their volatility. Because the COMP price changes erratically and unexpectedly, any investment into this cryptocurrency needs to be done very carefully and only after extensive research.