Even though Compound’s developers launched Compound Treasury, which allows institutions to borrow using their digital tokens as collateral, the Compound (COMP) coin failed to halt its recent downward trend and fell below the $62.00 mark. COMP is one of several interest-rate protocols that have emerged due to the rise of blockchain-based DeFi applications.
Compound is a self-contained algorithmic system that runs on the Ethereum (ETH) blockchain. Compound aims to provide cryptocurrency users with a cryptocurrency-based equivalent to traditional finance’s money-market accounts, where investors can earn a return on their investments. However, the Compound coin’s ongoing downward rally has been attributed solely to the bearish crypto market performance.
Because of poor global markets and recession fears in powerful nations such as the United States and Europe, the cryptocurrency market has been flashing red since the beginning of the week. On the other hand, the bullish US dollar, supported by higher interest rates, was another key factor putting ApeCoin under pressure.
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Borrowing Options Have Been Introduced
According to recent Compound cryptocurrency news, the protocol will allow institutions to borrow on September 14, 2022. According to a Medium post, institutions can now borrow through Compound Treasury, using digital assets as collateral, to meet the rising demand for liquidity. They will accept USD or USDC loans with collateral from ETH, BTC, and other ERC-20 tokens. Fixed rates beginning at 6% APR (annual percentage rate) are now available to approved institutions.
Compound Treasury offers a 4% interest rate on USD and USDC borrowing. According to Compound Treasury’s management, this measure was designed to increase liquidity demand while mitigating market volatility. Compound Treasury is backed by Compound Labs, which has notable clients such as fintech companies, banks, and blockchain developers. The vice president of Compound Treasury believes that the new borrowing option will continue to serve their customers during this period of uncertainty.
Clients can borrow for an indefinite period with no repayment schedule. According to the organization, the only criterion is that consumers remain ‘overcollateralized’ with crypto assets. As a result, the Compound price increased, but the gain was short-lived as the bearish crypto market took center stage.
Bearish Cryptocurrency Market
Considering the poor global markets and recession fears in key countries such as the United States and Europe, the cryptocurrency market has been losing momentum since the beginning of the week and is still trading bearish. The aggressive inflation-fighting policy of the United States Federal Reserve dampened the mood even more. This happened after the Fed raised interest rates by 75 basis points.
Meanwhile, the US dollar has breached the 111 level, making cryptocurrencies vulnerable to the greenback. As a result, the bearish crypto market was viewed as one of the primary factors keeping the Compound coin under pressure.
Compound (COMP) Price & Tokenomics
The current Compound price is $62.66, and the 24-hour trading volume is $50,548,645. In the previous 24 hours, the Compound has dropped 0.18%; however, it has gained 17.68% in the last seven days. Compound is now ranked #77 on the market, with a live market cap of USD 455,364,243. There are 7,267,152 COMP coins in circulation, with a maximum supply of 10,000,000.
Compound Price Chart – Source: Tradingview
The COMP/USD pair trades sideways on the technical front, with a price range of $60.39 to $65.98. The ascending triangle pattern keeps COMP choppy during the 4-hour timeframe, and the double top pattern is likely to provide major resistance at $65.98.
A break above $65.98 will likely extend an uptrend until $70.27 is reached. The 50-day moving average indicates an upward trend in COMP above $58.75. The MACD and RSI are diverging, with the RSI in a buying zone and the MACD in a selling zone. A break below $60.39 can extend the selling trend to $55.35 or $51.65.
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