Most of the crypto market is down, but Cosmos (ATOM) price is up — Why?

The Ethereum Merge has lastly occurred. It’s over, and happily it went easily with none main hiccups. As predicted by many, the occasion turned out to be a “purchase the rumor promote the information” fashion occasion, or maybe, the hotter-than-expected consumer price index print on Sept. 12 was the true catalyst that pushed the market in its present route. 

Whatever the causes for this week’s downturn, the Merge is over and in its wake, bulls are left holding a complete lot of nothing. It’s doubtless {that a} new bullish narrative might want to emerge, or analysts might want to maintain an in depth eye on sensible cash to see what property they elect to rotate into.

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Bear in mind, “The Merge,” based on so many “sensible” individuals, was meant to be a bullish occasion that may ship Ether value greater and the treasure trove of hardfork ETH POW tokens was meant to magically materialize multi-billions of {dollars} in liquidity which might doubtless influx to Bitcoin and assist the ailing asset to interrupt out of its present vary.

Effectively, none of that occurred. It’s to not say that it received’t occur, however the present actuality is a market painted in a brilliant shade of pink. Bitcoin’s Sept.15 drop under $20,000, induced a market-wide correction leading to double-digit losses for a majority of altcoins and in the mean time, there isn’t an simply graspable story for traders to interpret as bullish.

Not every little thing is dumping

There does occur to be an outlier, and its title is Cosmos (ATOM). To the shock of some, it’s one of many few inexperienced property on the charts on Merge day. Presently, the altcoin displays a 9.4% acquire and it has rebounded strongly off its Sept.14 low at $13.19.

Earlier evaluation mentioned how ATOM price trades within an ascending channel, driving above the 20-day shifting common and steered that dips to and below the shifting common mirrored good buy alternatives. A easy technical evaluation of ATOM’s value motion would concentrate on:

  • ATOM value continues to make greater lows and better highs whereas buying and selling throughout the trendlines of an ascending channel.
  • ATOM value noticed a quick bull break exterior of the channel, tapping the 200-day shifting common after which correcting again to the channel midline and 20-MA to verify every as help.
  • After testing help, value resumed the uptrend and now trades within the high of the present vary and is more likely to retest the 200-MA in an try to flip the extent to help.

Let’s briefly examine a number of of the attainable components behind ATOM’s bullish momentum.

Associated: Crypto traders eye ATOM, APE, CHZ and QNT as Bitcoin flashes bottom signs

Protocol migration, liquid staking, a rising TVL and the potential of IBC

Various protocols pivoted away from Terra after its implosion and re-launched on the Cosmos Hub SDK. In September, analytics agency and protocol builder Delphi Digital additionally introduced that it had chosen Cosmos as its major blockchain to construct new initiatives on.

When initiatives construct on Cosmos Hub, worth accrual to ATOM usually outcomes as a result of DeFi protocols and different DApps will take part within the community’s interchain safety system which works over IBC. Inter-Blockchain Communication protocol (IBC) is mainly an “web of blockchains” and a bridge that enables the cross-chain switch of tokens and safe interoperability between completely different blockchains.

Usually, the DApps, AMMs and DeFi-style platforms constructed on blockchains provide staking and the charges generated from this are oftentimes shared amongst stakers.

Staking ATOM at the moment provides a 17.75% APY and based on Staking Rewards, 66.75% of the out there circulating provide is being staked. Cosmos is ready to launch liquid staking, a phenomenon which when deployed in different DeFi platforms on different blockchains resulted in elevated purchase stress on the ecosystem’s native token(s).

Knowledge additionally exhibits a gradual improve within the variety of distinctive delegation addresses within the community.

7-day improve in distinctive delegation addresses on Cosmos. Supply: Staking Rewards

A number of Cosmos ecosystem platforms, together with COMDEX, are set to launch their very own stablecoin (CMST), and it’s doubtless that property locked and staked throughout the platform will “again” the $1 peg of mentioned stablecoins. Given the construction of the Cosmos Hub and IBC, it appears doubtless that ATOM will likely be one of many major property used within the “minting” course of.

In fact, the entire worth locked (TVL) throughout the Cosmos ecosystem collapsed as DeFi and the broader crypto market succumbed to the bear pattern. This determine has but to recuperate in a notable method, however the chart under exhibits notable inflows within the final 7-days. This will likely be a determine to regulate, alongside ATOM’s value.

Protocols throughout the Cosmos Hub (ATOM) ecosystem. Supply: Defi Llama

Extra development metrics that ought to elevate traders eyebrows are Cosmos’ 180-day provide aspect income, protocol income and each day buying and selling volumes.

Provide aspect income displays the quantity of transaction charges which can be allotted to validators whereas complete income is the entire transaction quantity paid by protocol customers.

Protocol income, however, is the quantity of transaction charges that go to protocol, who’re holders of ATOM and probably sharing a portion of this income with platform customers and stakers.

Cosmos circulating market cap and provide aspect income. Supply: token terminal
Cosmos circulating market cap and protocol income. Supply: token terminal
Cosmos circulating market cap and ATOM buying and selling quantity. Supply: token terminal

Basically, what we see is Metcalfe’s legislation in impact. Because the ecosystem grows, the community grows, complete worth locked will increase, liquid staking offers extra utility to staked property, which additionally enter a cycle of being bought, staked, minted to stablecoin or IOUs after which used throughout the ecosystem to gasoline extra development.

The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Each funding and buying and selling transfer entails threat, you need to conduct your personal analysis when making a call.