The rapid growth in the price of so-called decentralized finance tokens (DeFi) is generating new suspicions after an alternative currency reached USD 427.
In a curious sequence of events still unfolding in the exchanges, the DeFi Compound (COMP) token registered huge gains before Bitcoin Evolution falling by almost 50%.
The DeFi Compound token suffers heavy losses but continues to lead the DeFi rankings
Research warns about shorting the COMP token
Compound, an altcoin ERC-20 at Ethereum, launched at the US Coinbase Pro exchange this week. However, as soon as trading began, the sale increased under pressure to produce wild volatility.
In particular, an entity that was supposed to be an early investor in COMP began sending large amounts of tokens to Coinbase.
The identity of the destination address remains uncertain, but according to Galois Capital’s detective work, the movements are indicative of an organized liquidation. Since then, the COMP/USD pair has fallen from peaks of USD 427 to levels, at the close of this edition, of less than USD 235.
Boom DeFi: Balancer Echoes Compound with 235% Rise on Day 1
„It seems that this investor has another ~25,000 or possibly ~87,500 COMP if you go back one jump in the chain,“ Galois added, linking to another destination address.
„It would be interesting to see if any of them move to @coinbase. Probably indicative of short-term selling pressure.
Are the DeFi the ICO of 2020?
While the COMP clearly fits the description of a short-term bubble induced by the Coinbase listing, reservations about the DeFi as an ecosystem have increased.
This week alone, the DeFi Balancer (BAL) token increased by over 200% following its mainnet announcement.
As with the interest in initial currency offering (ICO) tokens and then stable currencies, a large number of projects appearing suddenly, along with sudden jumps in the value of their internal cryptomonies, fuel concerns that the market itself is overwhelmingly speculative.
Is the price of the Ethereum (ETH) on its way to $300 as DeFi currencies soar?
Others pointed out that, unlike the ICO phenomenon, Ether (ETH) has not yet benefited from the token boom.
„The last time an Ethereum use case went parabolic (ICO) ETH went parabolic with it,“ said Mythos Capital founder Ryan Adams.
„This time, an Ethereum use case is becoming parabolic (DeFi) but ETH is not in action.
As Cointelegraph reported, even legacy tokens like Bancor (BNT) and Maker (MKR) have seen double-digit gains over the past week.