- The DeFi industry has come under intense strain in the past few days.
- There are concerns about Curve Finance, the tenth biggest protocol in the industry.
DeFi tokens remained under intense pressure on Tuesday as investors reacted to the latest hack on Curve DAO, the tenth biggest protocol in the industry. Compound’s COMP token retreated by more than 14% while AAVE fell by over 9.4%. Other tokens like Curve’s CRV and Frax Share’s (FXS) tokens fell by over 5%.
DeFi tokens retreat
The biggest crypto story of the week was on a major hack that happened in Curve DAO, one of the biggest players in DeFi with over $2 billion in assets. On Monday, the developers announced that hackers had managed to steal over $100 million worth of tokens in the ecosystem.
Now, there are concerns about the entire DeFi industrya after it emerged that Curve’s founder, Michael Egorov’s tokens worth over $168 million were at risk of liquidation. He holds CRV tokens worth over $168 million tokens securing loans across multiple protocols like AAVE and Frax Share.
Egorov has borrowed heavily using CRV tokens as security. For example, he borrowed $32 million of FRAX tokens and $63 million worth of Tether on Aave. Therefore, there is a likelihood that the industry could go through its biggest crisis this year.
Egorov has been boosting his financial position. For example, he sold LDO, the native token for Lido Finance in several batches of between $10,000 and $50,000. At the same time, Justin Sun purchased CRV tokens worth over $2.3 million in a bid to save the company.
A collapse of Curve Finance would have a major impact in the DeFi industry since it is one of the biggest players. It is also widely used by thousands of people every day. As such, as we saw during the collapse of Lehman Brothers, other similar DeFi players will be affected.
The ongoing meltdown is happening at a time when many regulators are working hard to put guardrails in the DeFi industry.
Compound price prediction
COMP token price has come under intense pressure in the past few weeks after it peaked at $85.80 in July. It slipped and reached a low of $58.83. On the 4H chart, the pair is hovering slightly above this support level. It has also moved below the 25-period and 50-period moving averages while the Relative Strength Index (RSI) approached the oversold level.
Therefore, I suspect that the COMP price will have a relief rally in the next few days as investors buy the dip. If this happens, the token will likely retest the resistance level at $70. On the flip side, a drop below the support at $58.83 will point to further downside.
Read more: How to buy Compound.
AAVE price prediction
The 4H chart shows that the AAVE crypt price has made a bearish breakout in the past few days. It has managed to cross the important support level at $69.42, the neckline of the head and shoulders pattern. In price action analysis, this is one of the most bearish signs in the market.
AAVE has dropped below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the oversold level. The token will likely bounce back as investors targets the next resistance level at $69. This situation is known as a break and retest pattern and is a sign of a bearish continuation.
Read more: How to buy Aave.
