On-Chain Metrics: Compound Price Uptrend could Build Traction to $440

Last Updated July 23rd 2021
2 Min Read
  • An uptick in on-chain activity bolsters compound price significantly above $300.
    • COMP profit or loss ratio rushes above zero as investors begin to realize profits.
    • A falling wedge pattern breakout aims for $440 in the near term.

    Compound has been the cryptocurrency of the week alongside Ethereum Classic. The decentralized finance token rallied over 40% on Wednesday to trade weekly highs around $360. An uptick in on-chain activity also ensured that COMP’s uptrend was sustained.

    According to CoinGecko, the token has in the last 24 hours attracted $248 million in trading volume. Compound is the 56th largest cryptocurrency, boasting $1.7 billion in market capitalization.

    Compound price embraces falling wedge pattern breakout

    Amid the spike in on-chain metrics, Compound broke out of a falling wedge formed on the 12-hour chart. This is a highly bullish chart pattern that often leads to a significant trend reversal. A break above the upper trend line confirms the pattern, triggering an uptick in the volume to support the upswing.

    The breakout has a 73% target that could see Compound price touch $440. Meanwhile, the breakout already spiked to $360 before a correction followed. Support at $320 is required to ensure that the uptrend resumes.

    All short-term technical indicators such as the Moving Average Convergence Divergence (AMCD) appear to back the uptrend. For instance, more buyer orders will likely be triggered if the MACD closes the day above the mean line (0.00).

    COMP/USD 12-hour chart 

    COMP/USD 12-hour chart 070121

    The market value realized value (MVRV) by Santiment shows that Compound has lifted from extreme losses experienced by investors and currently holds at 6.2%. This metric shows the profit or loss of the holders of COMP.

    A low MVRV ratio near zero or below indicates that investors are deeply in losses. As the ratio lifts, holders start to come up, gasping for air. Note that as the MVRV rises, more investors realize profit and are likely to start selling.

    Compound MVRV model back in the green

     COMP/USD 12-hour chart 1 070121

    Santiment’s on-chain data also shows a surge in the number of active addresses. The active addresses metric tracks the number of addresses transacting on the network each day. A spike in this metric suggests that network activity is high, as well as the level of speculation. Compound price will likely soar as the level of interaction shoots up.

    Compound active addresses jump

     COMP/USD 12-hour chart 2 070121

    What may invalidate Compound price uptrend?

    The weekly gains stalled at $360, making this level a formidable resistance. If buyers fail to scatter the sellers in this area, overhead pressure will start to increase. On the downside, short-term support has been formed at $320 and must be guarded at all costs. The 50 Simple Moving Average (SMA) is also in line to provide support, but if it fails, Compound price may plunge to $245 and $195, respectively.

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