- OlympusDAO stock is down 25% amid market volatility.
- Since its launch, OlympusDAO has struggled badly during market crashes.
- The project has spawned many forks and attracted fans and critics in recent months.
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OlympusDAO has been hit hard by the recent market sell-off and is fast approaching an all-time low of $163 over the summer.
OlympusDAO enters free fall
Investors flee OlympusDAO.
The decentralized reserve currency protocol is down more than 87% from its all-time high in April of last year amid a sell-off across the market. OlympusDAO’s bearish trajectory accelerated over the past week, giving up 43.5% of its value. The OHM coin is down 24.9% in the past 24 hours, and is currently trading at $183. It is about 12% off its all-time low of $163 set during the market crash in May 2021.
OlympusDAO was the first crypto project to use a circular token structure to attract liquidity. Thanks to OlympusDAO’s smart token mechanism, investors can earn huge returns on bond assets and bet on OHM tokens. This so-called “flywheel” of liquidity has proven to be effective while the market impulse is bullish and has inspired many bifurcation projects such as Wonderland Money. The OlympusDAO craze reached its climax in late 2021 as various digital assets soared to new heights, and by November, the market cap reached $4 billion.
However, as the May crash and more recent price action have shown, OlympusDAO seems to suffer more than other projects when the market is down. OlympusDAO’s design has attracted criticism from many crypto enthusiasts who have likened the project to a Ponzi scheme. This is because Olympus and other similar ventures need new funds to enter the protocol to support incentives for existing investors.
Other protocols that use a token architecture similar to OlympusDAO have also been hit hard. Wonderland has also seen similar losses, with trading down 34.6% over the past week. On Ethereum, OlympusDAO-backed Redacted Cartel fork is also bleeding despite nearly tripling in value since its launch in mid-December. The protocol’s BTRFLY token has fallen by about 34% during the most recent decline, but has since partially recovered.
Since the beginning of the year, the cryptocurrency market has been hit hard after a weak ending to 2021. Bitcoin briefly dropped below $40,000 on Monday and fell 10% over the week but appears to have found support at current levels. Ethereum fared worse, seeing a 17% weekly decline. It also appears that the second largest crypto asset has stabilized after testing the $3,000 support. The latest drop came on the heels of the Federal Reserve’s January 5 confirmation that it would raise interest rates, which also rocked cryptocurrencies and stocks.
However, while most crypto assets are following a bearish trajectory for Bitcoin and Ethereum, there are some exceptions. The NEAR Protocol, a Layer 1 fragmented network, has recovered from its temporary vulnerability, gaining 17% in the past 24 hours. Elsewhere, the privacy-focused Oasis protocol has also shown strength, up 16.5% in the same period. It remains to be seen if these assets will continue to decouple from the broader market.
Disclosure: At the time of writing this feature, the author owns ETH, NEAR, and many other cryptocurrencies.
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