While the overall market downtrend has certainly affected the price and growth of Compound [COMP], a significant contribution to it also comes from the decrease in demand. This is clearly visible when looking at the on-chain statistics of the loan protocol.
relieved compound
Following the all-time high settlement rally of May 2021, COMP has experienced a decline that continues even 13 months later. The altcoin took a major hit in April after its attempts to break out and turn the downtrend into support failed. At that time, COMP ended up plummeting by 73%.
Composite Price Action | Fuente: TradingView – AMBCrypto
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Right now, the overall market downtrend is strengthening, as seen in the Average Directional Index (ADX). This brought the altcoin to the brink of falling into the oversold zone, the recovery of which will be terribly difficult for COMP.
Unfortunately, as hard as it naturally is for COMP to recoup losses, it’s also not seeing much support from its investors and holders.
Down the street…
The loan protocol has been facing a gradual decrease in the total amount deposited versus the total amount lent. As of December 2021, Dapp had around $19 billion on deposit and almost $7 billion loaned to users.
However, in the last six months, the figures have dropped to just $4.6 billion in deposits, and outstanding loans are at -$200 million.
Compound deposits and loans | Fuente: Duna – AMBCrypto Spanish
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The loan-to-value (LTV) ratio, which basically calculates the ratio of all outstanding loans to deposits, is now at -4%. Most of the contraction in the ratio occurred in the last two months, before which this value stood at 33%.
Composite LTV Ratio | Fuente: Duna – AMBCrypto Spanish
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However, investors pulling out of the protocol and the asset make sense. Especially since they have been steadily losing their earnings since May 2021.
A year ago, less than 3% of addresses were loss victims. In contrast, at the time of writing, losing investors now dominate 92% of Compound’s 187k addresses.
Compound Loss Investors | Fuente: On the block – AMBCrypto
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The probability of recovery at both extremes is only possible if the broader market recovers. Especially since Dapp growth has been pretty lackluster lately.
This is an automatic translation of our English version.
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