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Compound’s COMP token price drifted upward this week as the network’s total value locked (TVL) in the ecosystem drifted upwards. The token rose to $70, the highest level since Monday. It was higher by more than 16% from the lowest level this week.
Compound open interest rises
Compound, is a lending decentralised finance(DeFi) protocol that enables people to borrow and lend money. It is a major platform with a total value locked of over 1.7 million ETH, which is equivalent to over $3 billion. This makes it the seventh-biggest DeFi protocol in the world.
COMP price rose as the token’s open interest continued rising. Data compiled by Coinglass shows that the open interest jumped to over $170 million on July 16th after the outcome of the Ripple vs SEC case.
While open interest has pulled back recently, it is still hovering at the highest level in more than a year. On Wednesday, interest rebounded to over $122 million. Most of this interest is coming from Binance, Bybit, OKX, and Kraken.
Open interest is an important number in the futures market that shows the number of futures contracts held by participants that have not been settled. A higher open interest figure is seen as being a positive thing for a financial asset.
Meanwhile, the volume of COMP tokens traded in the past 24 hours has jumped by more than 115%. According to CoinMarketCap, the volume stood at over $220 million. Binance still has the biggest market share in this and is followed by Coinbase, KuCoin, and Kraken.
Fed decision ahead
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Other cryptocurrencies that have done well in the past 24 hours are Theta Network, Maker’s MKR, Dogecoin, and Trust Wallet Token. All of them have seen a higher open interest figure in the futures market.
The next key catalyst for COMP and other cryptocurrencies will be the upcoming interest rate decision by the Federal Reserve. As I wrote here, analysts believe that the Fed will hike interest rates by 0.25%. If this happens, the bank will push these rates to the highest level since 2001.
On a positive side, most analysts believe that the bank will signal that this will be the final rate hike this year. Inflation has dropped to 3.0% while the labor market has started to soften. A dovish tone by the Fed will be a positive thing for Compound and other cryptocurrencies.