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

Curve DAO token recorded significant growth with the start of December and became one of the top gainers last month.

Curve DAO (CRV) rose 500% in 30 days, reaching $1.33 on December 7 with a market cap of $1.6 billion. This is the highest level since February 2023. The asset faced a 7% correction in the last 24 hours due to overbought conditions. At the time of this writing, it is trading at $1.1.

CRV price and RSI | Source: crypto.news

However, CRV’s daily trading volume increased by 20% to $635 million, indicating increased investor interest.

Thanks to the price increase, CRV’s open interest reached an all-time high of $262 million, according to CEX.IO analysts. “This increase can be traced back to a decision made a month ago: the launch of Savings crvUSD (scrvUSD),” CEX.IO chief analyst Illia Otychenko told crypto.news.

Curve Finance is a decentralized exchange and automated market maker for Ethereum-based stablecoin and altcoin trading.

The decentralized autonomous organization voted in early November to create scrvUSD, a yield-generating stablecoin that allows users to earn rewards simply by holding the token. The main purpose of the stablecoin is to “scale crvUSD” and compete with Sky’s sDAI and Ethena’s sUSDe.

Moreover, scrvUSD allows users to earn income through Curve Finance’s lending and staking strategies (currently offering a 13% annual rate), according to CEX.IO analysis.

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

Although scrvUSD also aimed to stabilize crvUSD interest rates, it remained volatile due to high leverage demand. For example, after the US elections, borrowing interest rates rose to 50 percent in key markets.

“Higher interest rates generate more revenue per operation for Curve but limit new borrowings. To solve this problem, Curve DAO increased the income share of scrvUSD holders from 10% to 20% and adjusted the crvUSD yield mechanism, successfully reducing borrowing rates to 20% and increasing scrvUSD deposits.”

Otychenko said:

The launch of ScvUSD also led to an increase in demand for the CRV token. Otychenko points out that the rising CRV Relative Strength Index has placed the token in overbought territory, with it breaking above the 75 level on December 4.

“On the weekly chart, the RSI is in the overbought zone, indicating that a pause is likely before further upside,” Otychenko added.

The analyst expects a long-term increase in CRV price due to its growing ecosystem. However, the asset will likely face a “notable” correction before making another rally.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.