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Compound coin price prediction: Can COMP buck the bearish crypto trend?


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Compound coin price prediction: Can COMP buck the bearish crypto trend? Photo: Zeedign.com / Shutterstock.com

The compound cryptocurrency token (COMP) had a spikey but ultimately poor April losing 41% of its value but May has been a little brighter pulling back 12% so far to be $115.15 today (5 May).

It was bolstered in April by a listing on the Robinhood trading app but it was not enough to stop the losses. 

What is compound coin and how does the protocol work? Can the price continue to rebound, or is it a ‘sell’? We look at the latest news on the project and expectations for the future direction of the price to help inform your trading decisions.

compound price prediction

Compound provides money markets for crypto holders

Compound is among the interest-rate protocols that have emerged with the growth of decentralised finance (DeFi) applications on blockchains. 

Compound is an autonomous, algorithmic protocol that runs on the Ethereum (ETH) blockchain. The project was created in 2017 by Robert Leshner and Geoffrey Hayes, who previously worked at online food-delivery firm Postmates. Leshner is CEO of Compound Labs, which develops the protocol, and Hayes is its chief technology officer (CTO).

In May 2018, Compound was one of the first cryptocurrency projects to receive financing from Coinbase (COIN), which participated in its $8.2m seed-financing round. Compound has raised a total of $33.2m from three funding rounds to date.

Compound aims to offer cryptocurrency users an equivalent to the money-market accounts available in traditional finance, where investors receive a return on their deposits. 

Compound offers lending pools where users can deposit their funds or borrow money using their crypto as collateral, enabling them to earn interest in return. Within each pool, lenders earn half of the distribution and borrowers earn the other half.

There are currently more than 6.7 million COMP tokens in circulation out of a maximum supply of 10 million. Approximately 1,139 COMP tokens are distributed to users daily. The distribution is allocated to each liquidity pool and set by holders of the COMP token. COMP is the protocol’s governance token, which runs on Ethereum’s ERC-20 standard.

Decentralised community governance 

Compound token holders can debate, submit and vote on proposals for changes to the protocol without the Compound team needing to be involved. This process can be used to determine which cryptocurrencies to support, and the various collateralisation factors and token distribution rules. It can also be used to implement upgrades to add new functionality.

Token holders can delegate their voting rights to any wallet address. Wallets that hold at least 100 COMP tokens can create an autonomous proposal and wallets that hold 25,000 COMP are permitted to create governance proposals.

Protocol changes take at least a week to implement, as there is a two-day review period for governance proposals, after which there is a three-day voting period. If the majority of votes reaches at least 400,000, the proposal is queued and can be implemented two days later. 

The Compound protocol is designed to ensure that risk is limited by a liquidation function that keeps the amount a user borrows below their borrowing capacity.

“If the value of an account’s borrowing outstanding exceeds their borrowing capacity, a portion of the outstanding borrowing may be repaid in exchange for the user’s cToken collateral, at the current market price minus a liquidation discount,” according to the project’s white paper, as “this [incentivises] an ecosystem of arbitrageurs to step in quickly to reduce the borrower’s exposure and eliminate the protocol’s risk. The liquidation process may continue to be called until the user’s borrowing is less than their borrowing capacity.”

The white paper continues: “Any Ethereum address that possesses the borrowed asset may invoke the liquidation function, thereby exchanging their asset for the borrower’s cToken collateral. As both users, assets and prices are all contained within the Compound protocol, liquidation is frictionless, and does not rely on any outside systems or order books,” the document adds.

The ability DeFi lending offers for users to access funds without selling their assets creates opportunities for consumers, traders and developers, including:

  • borrowing tokens to use in the Ethereum ecosystem without waiting to fill an order or off-chain activity;

  • financing new investments, such as in initial coin offerings (ICOs), using the investor’s portfolio as collateral; and 

  • profiting from shorting a token by borrowing and selling it on an exchange.

Compound has become the eighth-largest DeFi protocol based on total value locked (TVL), with a value of more than $6bn, according to data compiled by DeFi Llama. That puts it ahead of popular apps like PancakeSwap (CAKE), SushiSwap (SUSHI) and Yearn Finance (YFI).

COMP price holds up as crypto prices retreat

The COMP price chart shows that the token gained 33.3% in 2021 as it spiked from the $149 level to a high of $531.98 in May and then dropped back to $200 at the end of the year.

The price moved up to $242.94 on 5 January, but then declined to $94.13 on 24 February as cryptocurrency markets lowered following the financial markets. The price began to rebound in March and reached $173.91 on 3 April as the markets attempted to rebound. But another sell off took the price back down to $116.4 on 11 April. 

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In the latest compound crypto news, the price has bounced up to the $140 range, however, after trading platform Robinhood (HOOD) listed the token for trading from 12 April along with Polygon (MATIC), Shiba Inu (SHIB) and Solana (SOL).

How is the COMP coin likely to trade in the future? Read on for the latest compound price predictions.

Compound (COMP) all-time performance

Compound coin-price prediction: Short-term COMP outlook

Technical analysis on the COMP token from CoinCodex at the time of writing on 5 May showed 15 indicators with ‘sell’ signals and 14 ‘buy’ signals. Only the volume-weighted moving average and the average directional index were bearish. The daily simple and exponential averages showed a mixed picture, while the weekly averages were bearish on the outlook for the COMP price.  

CoinCodex was bearish in its compound crypto-price prediction, indicating that the token could trade 11% higher at $127 by 10 May.

What do longer-term forecasts indicate about Compound’s potential as an investment?

Compound coin-price prediction 2022, 2025, 2030

The long-term COMP crypto-price prediction from algorithm-based forecasting site WalletInvestor was bearish at the time of writing (5 May), projecting that the value of the coin could plunge to $10.51 in 12 months and move up to $9.2 by the end of 2023. 

The compound prediction showed the price could then decline to $4.7 by the end of 2025 and fall to $1.43 in five years’ time.

The compound coin forecast from PricePrediction anticipated that the price could remain relatively stable in 2022 to average $151, but then move up to an average of $211 in 2023, based on deep artificial intelligence (AI)-assisted technical analysis. 

By 2025, COMP could reach an average price of $428, and by 2030 it could soar to $2,613 the projection showed. 

CoinPriceForecast was less bullish in its long-term COMP coin price prediction, estimating that it could average $173 in 2022 and $176 in 2023 based on historical data. By 2025 the COMP prediction indicated the price could average $210 and by 2030 it could climb to $294, the forecast showed.

When evaluating a COMP price prediction, it’s important to bear in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately estimate the coin’s target price in a few hours, and even harder to give long-term predictions. As such, analysts and AI-based forecasters can and do get their COMP coin-price predictions wrong.

If you are considering investing in cryptocurrency tokens, we recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis, and expert opinion before making any trading decision. Keep in mind that past performance is no guarantee of future returns.

FAQs

How many compound coins are there?

There are currently around 6.7 million COMP tokens in circulation out of a maximum supply of 10 million. COMP is ranked the 90th-largest cryptocurrency with a market capitalisation of around $775m.

Is the COMP coin a good investment?

In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your trading portfolio. Whether the COMP token is a suitable asset for you will depend on your risk tolerance and how much money you intend to trade.

Will COMP go up or down?

The direction of the COMP coin price will depend on the price trends in the broader cryptocurrency markets, as well as the development and adoption of the Compound protocol.

Can the COMP coin reach $500?

Forecast sites were mixed on the long-term outlook for the COMP price as of 5 May, with WalletInvestor projecting that it could fall dramatically over the next five years, while PricePrediction expects it will hit over $2,600 in 2030.

Does compound (COMP) crypto have a future?

The future of COMP will depend on whether DeFi apps like lending protocols become mainstream and how the competitive landscape develops.

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The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
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