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ATOM price is reaching for the Cosmos, but why?

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When a market crash occurs, the asset becomes oversold, usually resulting in an “oversold bounce”, “return to mean”, “return to mean”, or price to the bottom of the pre-crash range. A surge occurs.

Afterwards, if the catalyst for the decline was not significant enough to break the market structure, the asset under study would either consolidate, continue the downtrend, or return to a bullish uptrend. Those are the 101 basic trades.

Cosmos (ATOM) prices seem to follow this path this week, and altcoins are a little stronger, up 35% since Aug 22, but why?

Depending on how you look at it, technical analysis is undoubtedly a subjective process, but we can say that ATOM price is in an ascending channel or there is a round bottom pattern where price is about to break through the neckline.

ATOM daily chart.Source: Trading View

Resistance above $13 (horizontal black line in chart below) is currently being tested and if there is enough volume and stability from the broader crypto market, the price will move to the 200-day moving average of $17.20. may be heading towards

Of course, once Bitcoin surges at the close or hawkish stories start leaking out of Jackson Hole, the entire ATOM bullish structure will likely collapse. to adjust the size.

If the price hits the $17 zone, your favorite technical analyst will say:

If ATOM price manages to reverse to support the 200-MA, it could continue to the $27 level.

You may have seen it recently on crypto Twitter, but let me give you an example.

So is it just happening?

Traders need to find out if ATOM’s upward momentum is simply the result of a ‘steady’ market and Bitcoin and Ether trading in a relatively predictable range, or start by examining the current move. Is there a set of Cosmos-related fundamentals that justify swing long?

Apparently, analysts at VanEck, a multi-billion dollar wealth management fund, believe the price of ATOM will increase 160 times by 2030.

It’s not hard to believe, and maybe a little exaggerated, but see for yourself. Here’s what they said:

Based on a discounted cash flow analysis of the potential value of the Cosmos ecosystem in 2030, $140 ATOM token price target, downside to $1. Given that ATOM is priced at $10 on 2nd August 2022, we like the 14 to 1 odds offered and see this as a token buying opportunity.

Let’s take a quick look at the reason for the $140 ATOM.

Product-market fit and secure cross-chain bridging are likely to succeed after merger

VanEck analysts Patrick Bush and Matthew Sigel point to Cosmos’ Inter-Blockchain Communication Protocol (IBC) as a bullish catalyst. The main reason is that “discrete Cosmos SDK blockchains can open communication channels for exchanging data, messages, tokens, and other digital assets.”

According to analysts, The IBC architecture allows each blockchain to perform activities on another without relying on a trusted third party. The “smart” aspect allows you to:

“… solves many of the problems presented by a trusted bridging solution where over $1 billion was stolen through bridge hacking.”

Analysts also attributed the long-term bullish outlook to the Cosmos SDK, clear product market fit, strong token value generation partially influenced by staking, and cross-chain security by Cosmos Hub. Cites the imminent start of the mechanism.

What’s happening on the development side and roadmap?

ATOM will be the primary collateral asset for three new stablecoins to be launched within the Cosmos ecosystem.

Stablecoin issuance requires the locking or deposit of ATOM tokens, and according to the Cosmos Hub 2.0 roadmap, liquid staking will also roll out in the second half of 2022.

Learn more about the ATOM roadmap.Source: Cosmos Hub

During the DeFi Summer and post-summer revival, stablecoin issuance and liquid staking were two phenomena that boosted the TVL of DeFi-oriented blockchains. While dubious and somewhat Ponzi-esque, Liquid Staking has it while exerting buying pressure on the protocol’s native token. It is useful in various aspects of decentralized finance lending, borrowing and leverage.

A staked percentage of the circulating supply of ATOM.Source: Staking Rewards

Current data from StakingRewards shows that 65.84% of issued ATOM tokens have been staked with a minimum yield of 17.85%, and additional data from analytics providers shows that the number of ATOM stakers has increased over the past 30 days. It shows an increase of nearly 189%.

30-day increase in ATOM staker.Source: Staking Rewards

The above appears to be consistent with the paper that liquid staking and stablecoin minting are about to launch. Despite the confluence of these bullish indicators, it’s important to remember that asset prices do not exist in isolation. A handful of bullish signals may be flashing from ATOM, but the broader cryptocurrency market (including BTC) is hanging on a precipice.

No one is convinced that there is an elusive bottom that exists in a macroeconomic environment where most institutional and retail investors are against risk, and that cryptocurrencies are risk-off assets. not here. ATOMs value generation proposition is strong, and staking, stablecoin minting, and liquid staking have proven to be strong bullish catalysts for his DeFi tokens and altcoins in the past. But everything works until it stops working, right?

Remember Waves, Terra (LUNA) and Celsius (CEL)? I’m hungry.

Of course, Cosmos is neither LUNA nor Waves nor CEL. This is an extensive ecosystem with cross-chains, with a market capitalization of $12.6 billion, according to data from. coin gecko.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.