DeFi's Compound has crashed 50% in two weeks-and it may drop further

When Ethereum-based finance protocol Compound launched its native token COMP in June, it traded at $30. But due to an influx of hype which was somewhat a byproduct of market illiquidity, the altcoin shot over 1,000 percent higher, reaching an all-time high price in excess of $350. Unfortunately for those who bought the COMP at the highs, the decentralized finance-centric ERC-20 token has since been subject to a steep retracement.

That is approximately 50 percent lower than COMP's all-time high - and that loss has been realized just in two weeks.

Analysts have said that since Coinbase was one of the first "Mainstream" crypto exchanges to list COMP, that was the first venue through which many holders could sell their coins.

Investors in the cryptocurrency may be subject to further losses as analysts have claimed that the DeFi token may be intrinsically overvalued.

Even after its 50 percent decline from the highs, Compound is still a massive cryptocurrency.

According to a new analysis by trader "Theta Seek," who has closely tracked the DeFi boom, COMP may have further to fall.

2nd. The premise of the thread was that he's publicly short on COMP, writing that the "Fundamentals of 'governance', given the public information, don't make too much sense today." Theta added that he wouldn't be surprised to see another 50 percent decline to take the cryptocurrency below $100.1/ I'm short on $COMP, the fundamentals of the 'governance', given the public information, don't make too much sense today.

At a price of ~$200, the fully diluted market capitalization of COMP is around $2 billion when the underlying Compound protocol only holds $1 billion.

While COMP is not a stock, this method of valuation may suggest it is overvalued, as many companies trade in the 10-30 PE ratio range.

While there is evidence showing that COMP is likely to drop, not the same can be said about other Ethereum-based DeFi tokens.