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

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

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 possible {that a} new bullish narrative might want to emerge, or analysts might want to preserve a detailed eye on good cash to see what belongings they elect to rotate into.

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

Nicely, none of that occurred. It’s to not say that it gained’t occur, however the present actuality is a market painted in a vivid shade of crimson. 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 the whole lot 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 belongings on the charts on Merge day. At the moment, the altcoin displays a 9.4% achieve and it has rebounded strongly off its Sept.14 low at $13.19.

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

  • ATOM worth continues to make increased lows and better highs whereas buying and selling inside the trendlines of an ascending channel.
  • ATOM worth noticed a quick bull break outdoors of the channel, tapping the 200-day shifting common after which correcting again to the channel midline and 20-MA to verify every as assist.
  • After testing assist, worth resumed the uptrend and now trades within the prime of the present vary and is prone to retest the 200-MA in an try and flip the extent to assist.

Let’s briefly examine a couple of of the attainable elements behind ATOM’s bullish momentum.

Associated: Crypto merchants eye ATOM, APE, CHZ and QNT as Bitcoin flashes backside indicators

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

Quite a few 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 main blockchain to construct new tasks on.

When tasks construct on Cosmos Hub, worth accrual to ATOM typically 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 principally an “web of blockchains” and a bridge that permits the cross-chain switch of tokens and safe interoperability between totally different blockchains.

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

Staking ATOM at the moment provides a 17.75% APY and in line with Staking Rewards, 66.75% of the out there circulating provide is being staked. Cosmos is about 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).

Information 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 possible that belongings locked and staked inside the platform will “again” the $1 peg of mentioned stablecoins. Given the construction of the Cosmos Hub and IBC, it appears possible that ATOM might be one of many main belongings used within the “minting” course of.

After all, the entire worth locked (TVL) inside the Cosmos ecosystem collapsed as DeFi and the broader crypto market succumbed to the bear development. This determine has but to get better in a notable manner, however the chart under exhibits notable inflows within the final 7-days. This might be a determine to control, alongside ATOM’s worth.

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

Further development metrics that ought to increase traders eyebrows are Cosmos’ 180-day provide aspect income, protocol income and every day buying and selling volumes.

Provide aspect income displays the quantity of transaction charges which are 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 provides further utility to staked belongings, which additionally enter a cycle of being bought, staked, minted to stablecoin or IOUs after which used inside the ecosystem to gasoline further 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, it’s best to conduct your personal analysis when making a call.

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