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Crypto Cream Finance jumps 65%: is it the new hot pick?
- CREAM’s trading volume surged 378.65% in 24 hours and pushed the price to nearly $75.
- Almost all crypto holders are whales, but Cream Finance’s TVL has been disappointing.
CREAM, the native token of Cream Finance, a DeFi protocol, has taken the crypto market by surprise as its price has increased by 65.25% over the past seven days. This rise occurred at a time when the prices of most cryptocurrencies were declining or consolidating.
At press time, CREAM’s price was $72.25 with a market cap of $133.40 million. However, Cream Finance’s market reach appears limited given that the crypto is not in the top 100.
For those unfamiliar, AMBCrypto explains what the project entails in this article.
What is Cream Finance?
Cream Finance is part of aspire.finance [YFI] ecosystem. However, Cream doesn’t just work as a lending protocol for individuals. Instead, it also allows institutions and other protocols to access liquidity on its network.
Cream Finance is a permissionless and open source network and works for users of the Binance Smart Chain, Ethereum, Polygonand Fantom blockchains.
Few people know it, but CREAM came to life after a hard fork of Compound Financing [COMP] in 2020. In crypto, a hard fork is a modification of the network protocol of a blockchain.
When this happens, previous blocks become invalid as well as transactions. Additionally, users and nodes upgrade to the latest version to remain compatible with the upgrade.
Sometimes a hard fork is accompanied by a new token. Sometimes this is not the case. For Cream Finance, the 2020 split resulted in the development of the CREAM cryptocurrency.
With CREAM, users can stake, lend, and borrow assets on the network. However, the token is not the only asset usable on the network. Cryptos like COMP, ETH, YFI, some stablecoins and a few other tokens can interact with Cream Finance.
“This group” drives up prices
In line with the recent price increase, AMBCrypto noticed that Cream Finance has not announced any major developments. However, using data from IntoTheBlock, we observed an increase in whale activity.
Whales own a greater amount of cryptocurrency. Most of the time, tokens held by this cohort represent 1% of the total circulating supply.
According to data released at the time of publication, approximately 94.74% of CREAM holders are whales. Among this group, 19.42% of them made 1,362 transactions in the last 24 hours.
Source: In the block
This number is considered high whale activity and is enough to move prices significantly. As such, it appears that the reason Cream Finance outperformed other projects was due to high whale activity.
Confirmation of this increase appeared in the trading volume. As of this writing, CREAM volume is up 378.65% in the last 24 hours.
As of May 19, volume exceeded $100 million according to Santiment data. With this volume, CREAM price moved closer to $75.
Moments later, the price declined, indicating that some holders of the token were making profits. Even if volume has declined slightly from this point, it might not be enough to force a double-digit correction.
Source: Santiment
If the the volume continues to increase as the price increases, CREAM could lead to an additional 15% increase, which could bring the price to $83.95.
However, a drop in volume could mean a decrease in the strength of the token. In this case, the price could fall to $53.59, which is another area of interest.
Is CREAM reliable?
Despite the stunning price rise, the total value locked (TVL) indicated a bearish signal. TVL is an indicator of the health of a protocol.
If the metric increases, it means market participants are depositing assets into the ecosystem. When the TVL falls, it indicates an increase in withdrawals.
In this case, this could mean that participants no longer trust the system to perform well. According to AMBCrypto analysis using DeFiLlama, Cream Finance TVL amounted to more than $2 billion in 2021.
Source: DeFiLlama
But after a Flash loan attack in 2021, the metric has become a shadow of itself. As a reminder, a Flash Loan attack occurs when one exploits a flaw in a protocol and takes unsecured loans from a lending protocol.
Realistic or not, here it is Market capitalization of CREAM in terms of ETH
The attackers in question use it to manipulate the market while stealing assets belonging to depositors. This ugly side of DeFi is what Cream Finance experienced, so its TVL stood at just over $15 million at press time.
Although TVL does not necessarily influence the price of crypto, it indicates that users are hesitant to interact with the protocol.