COMP IRAs have many advantages, including tax-saving benefits, 24/7 trading, and diversification.
The world of cryptocurrency is developing quickly, with new coins being introduced every day around the world. In 2020, an innovative crypto protocol known as Compound (COMP) made its debut and became available to the public.
Currently, Compound crypto is one of many different coins that can be traded directly with Bitcoin IRA. As a primarily finance-focused cryptocurrency Compound coin empowers its users to enact interest rate protocols and perform a wide variety of applications. By investing in Compound crypto, holders can diversify their crypto holdings and potentially achieve strong returns over time.
Compound crypto is described as, “an algorithmic, autonomous interest rate protocol built for developers, to unlock a universe of open financial applications.” Due to the structure of the protocol, developers are afforded a substantial amount of flexibility, making it easier to develop, apply, and sustain a range of financial applications. And through the introduction of democratic mechanisms, the protocol can be effectively modified over time.
By investing in the corresponding cryptocurrency, investors can directly take part in how the protocol is governed. The Compound coin, according to Coinbase, “is an Ethereum token that enables community governance of the Compound protocol”, further explaining, “COMP token holders and their delegates can [sic] debate, propose, and vote on changes to the protocol.” As of June 2022, Compound is the 59th most popular cryptocurrency in circulation. Its price sits at about $34 and its total market cap, distributed across 7.2 million circulating coins, is about $240 million USD.
There are already several known applications of Compound coin, with added applications expected to be delivered soon. One example of an institutional application is the “Compound treasury”, which enables users to “earn 4.00% APR on USD balances without any of the complexities of crypto.” As an additional incentive, when a “user interacts with a Compound market (by borrowing, withdrawing or repaying the asset), they are rewarded with additional COMP tokens.”
Other institutional applications of Compound crypto include Coinbase Custody, Anchorage, Fireblocks, Bitgo, and Ledger. In general, the dynamic nature of Compound crypto makes it very adaptable for the financial technology (fintech) sector, meaning it will likely be able to continue supplying new uses and sources of value for its holders well into the future.
Compound coin first debuted in June 2020 with the express purpose of being used for applications that relied on the use of interest rates and the accumulation of interest. By the end of the month, the price of the Compound coin experienced a dramatic spike, jumping from just over $60 to a first week high point of $337.
Following its initial traction, Compound coin rallied for most of its first year, eventually reaching an all-time high of about $915 in May 2021. Following a dramatic fall throughout the summer of that year, the coin’s price experienced several waves of volatility.
Today, as of June 2022, the price of COMP sits just above $34. The platform primarily consists of lenders and borrowers who want to lend various crypto assets to one another. As the Compound whitepaper helps explain, it may offer both parties the immediate benefit of not having to negotiate terms or create complex deals.
Due to the volatile nature of the cryptocurrency marketplace, it is difficult to know where Compound coin’s price is most likely to move. The price of COMP remained within a $60 to $70 band for the month of May, which suggested to breakout traders that a reverse breakout (or, a price increase), was likely to occur. However, the price fell below the band in June – perhaps due to the overall market uncertainty.
These indicators are generally more short-term oriented than long-term oriented—whether Compound can increase its value over the next few years will depend on how many users are willing to adopt it, along with whether the changes made to the underlying protocol will be financially productive.
There appear to be a few other indicators that Compound’s price might soon be on the rise. Though the coin is currently just the 59th most popular coin, its ranking has slowly been getting better over the past two months. Additionally, the coin is experiencing a buying volume that is over double its selling volume, which will likely place at least some upward pressure on the coin’s future price. With just 72% percent of Compound coin’s supply in circulation, there appears to be some more room for growth in the near future.
Though the coin is only about two years old, Compound crypto has proven a consistent effort of safety. The coin’s whitepapers are robust and, through the use of a verified blockchain, ownership of the coin should be considered very secure. Maintaining this level of security will be extremely important for Compound to achieve a bright future. But, at least for the time being, the coin seems very secure.
Whether compound cryptocurrency is a good investment will depend on several factors. Most importantly, investors will have to consider their personal level of risk tolerance and their long-term financial goals.
The relatively limited price history of COMP, high levels of volatility, and recent drop in price all suggest that Compound coin should probably only be bought by investors with a fairly high level of risk tolerance. However, what the coin has done that ought to give investors hope is that it has clearly shown its value. The wide use of institutional applications, generally speaking, should be interpreted as a sign that the Compound protocol will likely be here to stay.
One of the best ways to buy Compound coin is through the use of a Bitcoin IRA wallet. With this innovative platform, users can securely* buy and sell more than 60 different types of cryptocurrencies to diversify their IRA. Applying for an account takes minutes, meaning that anyone can get started on their journey to becoming a direct crypto investor today.
*Security may vary based on asset chosen and custody solution available.