Compound (COMP) has shed 12% of its value, and is facing the risk of another crash after crypto venture firm a16z moved 300,000 tokens to Coinbase. Meanwhile, a descending triangle pattern hints at a potential 27% crash for Compound price if it loses a key support level. COMP is trading at $45.87 today, June 28, with $26 million in daily trading volumes.
Compound Price Risks 27% Crash if $45 Support Fails
COMP price is at risk of a steep crash not only because the broader crypto market is on edge, but also because it trades within a descending triangle pattern on the daily chart. This pattern forms when the price makes lower highs while the support level holds, signaling that a bearish continuation is likely to occur.
The critical support level in this pattern stands at $45.08, which the Compound price has been defending for the last three weeks. Bears are attempting to breach this support level without success, but rejection at the 50-day SMA indicates that the breakdown is now possible.
The 50-day SMA is acting as a strong resistance, and unless COMP price makes a strong close above it, the short-term trend will continue to favor bulls. If this momentum causes the price to break $45.08 support, a 27% crash is likely to occur, pushing the Compound price to $32.65.
In the event of such a drop, COMP will trade at its lowest price in two years. The RSI is favoring this bearish narrative for the price forecast, with the reading of 46 indicating that the momentum is negative.
The pathway to a bullish reversal lies at the 50-day SMA level of $46. A crossover above it could prevent a bearish breakout from the descending triangle, and if bulls can target the 200-day SMA of 55, the long-term trend will also favor COMP’s upward recovery. Meanwhile, a recent move by Trump’s WLFI to fuel DeFi expansion could also return market interest.
a16z Dumps $13.75M COMP as Whales Remain Hesitant
Crypto venture capital firm a16z has transferred 300,000 COMP tokens, valued at $13.75 million, to the Coinbase exchange per an X post by EmberCN. The move signals intent to sell, and this could create bearish pressure on the Compound price.
This firm is one of the top investors in COMP after purchasing 1 million tokens in 2020. The firm has been reducing its holdings over the years and currently holds around 500,000 tokens valued at nearly $23 million.
The recent sale by a16z, which can be classified as one of the largest whales, comes as large transactions dwindle, indicating that whales are not looking to accumulate at the current Compound price. IntoTheBlock data shows that the transactions valued at more than $100,000 have fallen from 560,000 COMP to 38,000 tokens in one week, representing a 93% decline.
Therefore, as a bearish technical structure emerges and a16z looks to sell 300,000 COMP tokens, the Compound price is at risk of losing crucial support at $45.08. This move may trigger a 27% crash to $32.65.
