Other Fibonacci pattern for Compound & why you should be a bullUsing the Fourth of July low as a bottom (as opposed to the starting price), we see nice Fibonacci lines as well. Note that the chart has bounced several times at the $245.50 level, so expect to see tough resistance there on the way back up. If/when we eventually surpass our prior early peak, we could see prices up to $514.90 or even more optimistically $732.85.
My reasons for being bullish in the long term are simply that I believe the Compound protocol itself is something that is only going to catch on to a wider audience as time goes on. I see a future where Venmo users switch to paying each other with smartphone apps that use stablecoins, and those stablecoins gain interest through the Compound protocol when they are sitting idle. Such apps already exist, but they have yet to be discovered by a broad mainstream audience. As of this writing, the iPhone app Dharma has 4.4 stars, but only 72 ratings. People love it, but most haven’t discovered it yet. The benefit of gaining interest with the Compound protocol has already been realized by crypto users, and there is a clear path to its realization by the mainstream public through smartphone apps.
The recent change in Compound rules made it so that crypto users could not milk the system by “yield farming” with an exorbitant number of BAT tokens gaining interest at over 20%. The change in rules now means that stablecoin users have more to gain from using the protocol. This means two things that are very promising for the long-term future of Compound and for the COMP token itself as an investment:
1) Smartphone apps that utilize Compound and stablecoins will allow the mainstream public to pay each other with stablecoins, which unlike money in a Venmo account, gain interest, but unlike cryptocurrency, don’t come with confusing conversion rates and volatile price swings.
2) The demand for the COMP token will be driven by the incredible power that it gives token holders. A few days ago, BAT token in Compound was gaining >20% APR. Yet a single decision made by COMP token holders changed the rules such that BAT currently receives 0.10% APR. That demonstrates that COMP token holders collectively have an enormous amount of power. In theory, supporters of a specific altcoin project could try to buy up as much COMP as possible in hope of being able to affect such a decision in a way that favors their coin’s APR, with hopes that doing so would lead to increased purchase of their token. Thus, owning COMP tokens gives its owners incredible power over the Compound financial system and, as an ever-expanding pool of people use this system (for reasons stated above), the desire to own COMP will increase, driving up demand and thus driving up the price of COMP.
“When you think about every bull market, there’s one common thread: an expanding universe of people who own it.”
-Paul Tudor Jones
“Be fearful when others are greedy and greedy when others are fearful.”
-Warren Buffett
