COMP investors choose this over selling as Compound price breaches $50
|- Compound price has risen by almost 90% on the back of "Superstate" hype to trade at $50.
- COMP investors have bought back nearly 100,000 tokens worth $5 million in the span of 24 hours.
- Interestingly, loss-bearing transactions peaked in the past day, suggesting investors are enthusiastic but still underwater.
Compound price is leading the crypto market rally, increasing investors' hopes significantly. This is reflected in their behavior on-chain in the past few days. However, despite it seeming like COMP holders are gaining profits with every passing minute, the truth stands to be far different.
Compound price hike results in losses
Compound price stunned the market after it shot up by more than 70% this week, with the altcoin adding about 25% to this rally in the past 24 hours. The overall growth has thus pushed its recovery rally of the second half of June beyond 91%, bringing the market value of the altcoin to $50 at the time of writing.
COMP/USD 1-day chart
The reason behind this rally, in addition to the broader market cues, is the recent announcement of the formation of "Superstate". The filing of the company states that Superstate will form a short-term government bond fund with the help of Ethereum, which will be used as a secondary record-keeping tool.
Generally, events such as this create a profit-taking environment amidst the investors, but interestingly, COMP holders had their selling bout before the news hit the circles. Between June 24 and 27, about 90,000 COMP was sold off to the exchanges as investors tried to make the most during the 40% rally.
However, the altcoin began rallying the next day and increased by another 50% in three days. This led to the investors flipping from selling to accumulating now. These investors were of hope that the rally would continue and decided to buy about 100,000 COMP worth $5 million from the exchanges.
Compound supply on the exchanges
The point to be noted here is that these transactions were not conducted out of greed but with the hopes of profits. As observed on-chain, the transactions were loss-bearing, suggesting that the COMP moved around in these transactions was below the price it was acquired at.
Compound transactions in loss
Thus, this shows that COMP holders are attempting to catch a much bigger fish, hoping for a rally and would only proceed to take profits when they are significant. This could backfire as Compound price rally could cool down since the COMP market is overheated from the recent rise.
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