Crypto lending protocol Compound has had a fantastic price performance of late but the hourly chart shows a possible cooldown in growth. A decline in whale accumulation and hype trading could also weigh on COMP’s price action and discourage new investments over the shorter term.
While most top alts were ranging following a broader market correction on 11 April, small-cap performer Compound did not follow common consensus. Its price was up as much as 35% in the last 2 days and snapped a 1-wk high at $157. Massive whale transactions greatly influenced COMP’s pump, with over 12 $1+ Million transactions made recently.
However, the market was turning the tide as the weekend drew closer. Large holders’ Netflow slipped lower over the past 48 hours, suggesting that a few whales had begun offloading COMP after the price gain.
Furthermore, a reduction in social media mentions meant that hype trading amongst retail traders could not be relied on for an extended rally. As per LunarCrush, COMP’s daily social volume slashed by nearly 50% on the day as other alts dominated social media platforms.
Early signs of selling pressure were already interfering with COMP’s price action on the hourly chart. A host of red candles emerged as COMP tested $157-resistance. The RSI flashed a bearish divergence, hinting that buyers were losing vigor. More sell orders could also follow after a bearish crossover developed on the MACD.
Given the current market situation, it’s highly risky parking funds in Compound concerning its press-time level. Instead, a safer call would be to wait for a correction to pan out and enter at a discounted price. An ideal buy zone on the hourly chart resided between $140-$143 support. Meanwhile, a premature close above $175 can be followed up by long setups, but a reasonable stop-loss would need to be maintained around the $200-mark.