The total value of DeFi-blocked funds has fallen by about $1 billion in the last few days
COMP price collapsed over 70% in the last 3 months to trade below $100
The price action is now approaching the main short-term support line at around $79
The price of compounds (COMP) continued to plummet this month, having lost around 65% since August.
Fundamental analysis: DeFi investors make profits
A high number of DeFi coins are still far from their peak levels, although Bitcoin has reached its annual highs.
Data from crypto information provider IntoTheBlock suggests that prices for DeFi coins and protocol metrics have diverged significantly since September, with the total value of locked coins falling by about $1 billion in the last few days, but managing to approach their all-time highs.
However, prices for DeFi tokens have continued to fall significantly, with some of them down as much as 50% from their highs. The IntoTheBlock report claims that this deviation may be a result of the transition to a risk-free environment as investors have retained their profits.
DeFi brands with high levels of supply inflation have been hardest hit, with Compound, Balancer, MCDEX, Curve and mStable all down over 60% since September.
“This shows that while the reduction in liquidity may be fuelling demand on the supply side, it can also cause the tokens to suffer setbacks tantamount to a devaluation due to hyperinflation.
Ether-powered DeFi tokens have fallen by about a third from $7.5 billion to $5.07 billion market value last month alone.
On the other hand, the market value of Stablecoins and coated Bitcoin grades continues to rise, suggesting that yield-oriented farmers have abandoned risky DeFi coins and taken on lower-yielding assets with lower volatility.
According to the report, composite finance, which stimulated the frenzy of decentralized financial agriculture, may also have triggered the correction, as it provided the turning point for such rapid growth.
The introduction of the COMP token led to the generation of hundreds of clones and forks, each with its own governance tokens and yield-growing pools, which led to a growth in liquidity and token prices until the market collapsed in September.
Technical analysis: Approaching the main short-term support
The price of compounds (COMP) has crashed in the past three months. In September the coin lost over 45% before falling a further 31.6% in October. These losses have extended into November, with the COMP price having already fallen by more than 7%.
COMP price daily chart (TradingView)
Good news for buyers is that the price action is now approaching the main short-term support line at around $79. This is where the 127.2% Fibonacci extension line comes in, as the COMP bulls are looking to recover to at least $120.
Recent data suggests that many decentralized financial coins are still nowhere near their peak as yield farmers have decided to secure their profits. This is one of the reasons why the COMP price has collapsed by over 70% in the last 3 months.