Compound (COMP) has faced a recent downtrend, which nearly ended over the last 24 hours before investor skepticism took hold again.
While the price showed some recovery, the altcoin now faces stronger bearish signals than before. This reflects the ongoing uncertainty and caution surrounding Compound’s recent developments.
Compound Foundation Comes To Life
The Chaikin Money Flow (CMF) indicator has recently reached an all-time low, signaling significant outflows from Compound. Investors have been quick to act, cashing out their holdings as concerns over the Compound Foundation announcement continue to linger. This suggests that investors are reacting to short-term factors and are also deeply concerned about the broader implications for the token’s future.
Outflows reaching this level indicate a profound lack of confidence among investors. The higher-than-usual outflows suggest that Compound’s announcement stirred a strong negative sentiment. This is because the initial optimism was marred by the lack of necessity of such an organization. Thus, investors likely moved to offset potential losses by selling.
The “Age Consumed” metric for Compound recently spiked to its highest level in 17 months, highlighting that long-term holders (LTHs) have started to sell their positions. Typically, LTH selling is a bearish signal, especially when it occurs outside of a bull market. This suggests that even the more patient investors are losing conviction in Compound’s potential.
When LTHs sell, it often signals doubts about the asset’s long-term growth. Since these investors typically hold for extended periods, their decision to liquidate is a key signal of eroding trust in Compound’s future prospects. This decline in investor sentiment can lead to continued selling pressure and further price declines.
COMP Price Fails Breakout
Compound’s price surged by 102% during the intra-day high on Tuesday before dropping back down. Over the last 24 hours, COMP rose by 10%, and the crypto token’s price is currently trading at $43.68. While the rally was notable, the price is still under pressure due to ongoing skepticism.
If the bearish sentiment intensifies, COMP could face additional downward pressure. Despite a temporary rally, the failure to secure $44.60 as support suggests that further declines are likely. If the current trends hold, COMP could fall to $37.62, especially given the actions of skeptical investors.
For the bearish thesis to be invalidated, Compound needs to regain and secure $44.60 as support. If this happens, the price could rise through $48.44 and potentially surpass the $50.00 mark. Only then would the outlook turn bullish, signaling a potential reversal in the trend.
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