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Why Olympus Crypto Plunged This Week but Recovered Big-Time Today

What happened

In the world of decentralized finance (DeFi), Olympus (CRYPTO: OHM) is among the tokens that have garnered a tremendous amount of attention this past year. Today, it's generating even more attention over its 24-hour move 7% higher, as of 11:30 a.m. ET.

This move follows a very volatile week, which saw the token drop nearly 30% over a 24-hour period on Monday. Since then, Olympus has regained a good chunk of its weekly losses courtesy of today's rise. As of 8:45 a.m. ET, its gains were 13% over the previous 24 hours.

Image source: Getty Images.

So what

Zooming out on Olympus' stock chart, it's clear that the OHM token, which underpins the DeFi protocol OlympusDAO, is a highly volatile one. This token has spiked impressively on two occasions this past year, only to fall back to earth in short order. This week, OHM crypto approached its all-time low, before recovering in recent days.

Much of the negative sentiment around the OHM token has come about due to this cryptocurrency's unique tokenomics. Essentially, OHM powers the OlympusDAO, which allows users to buy the equivalent of crypto bonds. Users can buy OHM tokens at a discount in exchange for holding these tokens for a specified period of time. Other staking rewards have resulted in impressive annual percentage yields, as high as 4,000%.

However, concerns over who owns the liquidity with this platform has some investors unsure about locking up their OHM tokens. The intense price volatility with this token has added to these concerns, with investors seeming to choose other passive income options in the crypto world.

Now what

The crypto world is moving at light speed. Accordingly, many early-stage projects, such as OlympusDAO, provide investors with intriguing upside potential along with higher risk.

Right now, the market appears to be questioning the viability of this DeFi protocol's ability to maintain liquidity in the DeFi 2.0 space. Less than a year old, this DeFi experiment is one that has seen interest surge and decline in rapid fashion in recent months.

Thus, investors looking for some semblance of stability in the crypto space may indeed choose to look elsewhere. It appears to be the case that OHM is a token that will remain more volatile for some time. Today's move, while attractive, may not be enough to attract long-term holders.

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Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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