Expert take: Here’s why CRV rallied 500% to 22-month highs

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As a seasoned crypto investor with years of experience navigating the volatile waters of digital assets, I’ve learned to keep a keen eye on projects that show promising growth like Curve DAO (CRV). The recent surge of CRV, reaching an impressive 500% increase in just 30 days, has certainly caught my attention. However, as we all know too well in this world, what goes up must eventually come down – and the 7% correction in the past 24 hours is a testament to that fact.

As December began, the value of the Curve DAO token surged, placing it among the leading tokens with substantial increases during the past month.

Over the past 30 days, Curve DAO (CRV) surged an impressive 500%, peaking at $1.33 on Dec. 7, marking its highest point since February 2023, with a staggering market cap of $1.6 billion. However, the asset experienced a dip of about 7% in the last 24 hours as a result of overbought conditions, currently being traded at $1.1 as we speak.

CRV’s daily trading volume experienced a 20% boost, climbing up to $635 million, indicating heightened investor curiosity.

Due to the recent price increase, the open interest for CRV has peaked at an unprecedented level of $262 million, as reported by CEX.IO experts. This significant jump can be attributed to a strategic move made a month prior: the introduction of Savings crvUSD (scrvUSD), as stated by Illia Otychenko, Chief Analyst at CEX.IO, in an interview with crypto.news.

Curve Finance functions as a decentralized platform, facilitating the trading of various Ethereum-linked stablecoins and alternative coins through its automated market-making system.

In early November, the decentralized organization made a decision to establish scrvUSD, a type of digital currency that yields returns for token holders, and this stablecoin was designed primarily to expand upon crvUSD and challenge Sky’s sDAI and Ethena’s sUSDe.

As a crypto investor, I’ve found a great opportunity with scrvUSD that lets me earn income through the lending and staking strategies provided by Curve Finance. Currently, these strategies are yielding an impressive annual return of 13%, according to CEX.IO’s analysis.

The stablecoin has already reached a $20 million market cap.

Although scrvUSD also aims to stabilize crvUSD interest rates, they remained volatile due to high leverage demand. For example, borrowing rates surged to 50% on key markets following the U.S. elections.

Increased interest rates bring more income for Curve on each transaction, but they also reduce the number of new loans. To tackle this issue, Curve DAO raised the revenue share for scrvUSD holders from 10% to 20%, and made changes to the crvUSD yield mechanism. These adjustments successfully lowered borrowing rates to 20% and increased scrvUSD deposits.

Otychenko said.

The launch of scrvUSD brought increased demand for the CRV token as well. Otychenko points out that the rising CRV Relative Strength Index puts the token in the overbought zone as it rose above the 75 mark on Dec. 4. 

As a crypto investor, I’ve noticed that on my weekly chart, the Relative Strength Index (RSI) has ventured into the overbought territory. This could imply a momentary halt in the price action, followed by potential further upswing, as highlighted by Otychenko.

According to the analyst’s prediction, the future could see a significant increase in the value of CRV tokens, driven by the expansion of its associated network. Yet, it is anticipated that there will be a substantial dip or adjustment in the asset’s value prior to another upward trend.

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2024-12-09 12:04