Compound prices dip as investors take profits following a brief jump

• COMP’s price increased by over 80% within a week after founder Robert Leshner left Compound.
• However, as many begin to take profits, COMP’s value has decreased in the last month.

The value of Compound [COMP] rallied by 83% a week after the project’s founder Robert Leshner exited the project and announced the launch of Superstate on 28 June. Now shedding most of its gains, the alt’s price has plummeted by double digits since August began.

Read Compound’s [COMP] Price Prediction 2023-24

At press time, COMP traded at $56.81. With a 28% decline in value in the last week, it ranked as the crypto asset with the most losses.

Pyrrhic victory after Leshner’s exit

On 28 June, Leshner announced his departure from the lending protocol and made filings for the registration of his new company Superstate. This company will create a short-term government bond fund that uses the Ethereum blockchain as a secondary record-keeping system.

Today, I'm excited to announce the founding of a new company, @superstatefunds

Superstate's mission is to create regulated financial products that bridge traditional markets & blockchain ecosystems.

— Robert Leshner (@rleshner) June 28, 2023

In a recent report wherein it tracked the performance of DeFi-related crypto assets, on-chain analytics firm Glassnode noted that COMP and  MakerDAO’s MKR were the “two tokens that stand out as primary drivers of this trend.” 

The surge in COMP’s price was sustained till mid-July, when it peaked at $82.3. Since then, it has embarked on a downtrend due to increased profit-taking activity on-chain.

A look at COMP’s price performance on a D1 chart confirmed the sell-offs. Following the price peak on 16 July, COMP accumulation reduced, and most daily traders began to offload their bags. 

Key momentum indicators have since trended downward and were spotted in oversold regions at press time. For example, the alt’s Money Flow Index (MFI) was 27.83. Also far from its center line, COMP’s Relative Strength Index (RSI) was 39.95.

Further, signaling continued liquidity exit, the token’s Chaikin Money Flow was negative at press time below the zero line. It is trite knowledge that a CMF value below the zero line is a sign of weakness in the market.

Most traders have chosen to sell their COMP tokens due to how profitable the transactions have been in the last month. On-chain data revealed that, on a 30-day moving average, for every 1 COMP transaction that resulted in a loss, there were 1.41 transactions that resulted in a profit.

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May the odds favor the best punters

The drop in COMP’s value has also been exacerbated by the decrease in Open Interest in the last month. Per data from Coinglass, Open Interest has seen a 47% decline since COMP’s price peaked. 

The futures market has also been significantly marked by negative funding rates, signalling that many have continued to place bets in favor of a decline in COMP’s price.