The price of Cosmos's ATOM token has posted a 2.52% gain over the last 24 hours to trade at $9.08 at the time of writing. With a market capitalization of $3.14 billion, Cosmos ranks as a top 20 cryptocurrency. Let's analyze the key metrics behind this price increase to uncover insights for traders.
ATOM saw $51.49 million in 24-hour trading volume, indicating a moderate amount of liquidity and market activity. The 1-hour change came in at +0.75%, signaling some positive short-term momentum. However, the wider view shows a more negative picture.
Over the past 7 days, ATOM has declined by 4.39%. Looking at the past month shows a loss of 2.99%. Going out to 6 months reveals a substantial drop of 32.93%. So what could be driving this bounce in ATOM's price over the last day?
- Broader crypto market rebound - With Bitcoin up 4% and altcoins rallying, ATOM is likely getting lifted in sympathy. Cryptocurrencies tend to trade correlated.
- Bullish RSI divergence - The RSI is trending higher while price trends lower, a positive sign of building momentum.
- Network activity growth - Key metrics like number of transactions and unique wallets interacting have trended higher recently, underpinning fundamental value.
- Testing key moving average - ATOM appears to be establishing support around its rising 100-day moving average, which currently sits around $9.
However, some risks could limit additional near-term upside for ATOM:
- Persistent macro uncertainty - Recession odds remain elevated, which could hamper risk appetite for crypto. This headwind still lingers.
- Existing in downtrend - ATOM has formed lower highs and lower lows in place since its August 2021 peak, maintaining its bearish momentum.
- Lack of obvious catalysts - Besides generic network upgrades, there appear to be no major developments on the horizon that would spark a rally.
- Fierce competition - Alternative layer 1 blockchains like Avalanche and Solana threaten Cosmos's share of decentralized app development.
Is Cosmos Bottoming Out Before Its Next Major Bull Run?
After surging to over $40 in September 2021, ATOM has plunged approximately 75% to trade around $9. This severe decline has some market analysts wondering if Cosmos is bottoming out before its next major uptrend.
There are several signals indicating ATOM could be bottoming ahead of its next rally:
- Extremely oversold conditions - The RSI indicator hit the rare single-digit levels, which usually corresponds with seller exhaustion.
- Key support holding - Multiple tests of the $8-$9 support level have held over the past month, signalling firm buying demand.
- Decreasing trading activity - Volume has dried up significantly since the September peak, reflecting waning selling pressure.
- Bullish divergences - The RSI is forming higher lows against ATOM's lower lows, a classic positive momentum divergence.
- History of 80%+ drawdowns bottoming - Cosmos's previous bear markets saw capitulation bottoms form after 80%+ declines, similar to the current drop.
However, some risks could delay or interrupt a sustained turnaround:
- Existing downtrend intact - ATOM continues printing lower highs and lower lows, lacking any clear trend reversal signals yet on the charts.
- Macro headwinds persist - Recession and inflation concerns remain elevated, which could hamper risk appetite towards speculative assets like ATOM.
- Loss of developer activity - Alternative layer 1s are innovating more quickly, raising concerns over Cosmos's long-term viability.
- No clear catalysts on horizon - Besides staking rewards, there are few obvious near-term catalysts to attract fresh buying interest.
While oversold conditions make an ATOM relief rally likely, reclaiming higher levels and bullish volume is probably needed to confirm its next bull run is kicking off. Caution still seems prudent until more signs emerge.
Could Fed Rate Hikes Continue Weighing on Cosmos and Crypto Assets?
The Federal Reserve's aggressive interest rate hikes to combat inflation has negatively impacted speculative cryptocurrencies like Cosmos in 2022. As rates are expected to continue rising, could this macro factor keep dragging ATOM and crypto prices lower?
There are a few ways continued Fed rate hikes could create headwinds:
- Reducing risk appetite - Higher rates signal economic weakness, leading investors to sell risky assets like crypto in favor of safe haven assets.
- Stronger dollar - Rate hikes strengthen the U.S. dollar, presenting a challenge for dollar-pegged cryptos like ATOM.
- Draining market liquidity - Less accommodative monetary policy reduces cheap money available in markets, which can weigh on valuations.
- Rotation back to bonds - Rising yields make fixed income more attractive, potentially shifting funds out of crypto markets.
However, some factors may allow cryptocurrencies to diverge from rate hike impacts:
- Unchanged crypto fundamentals - Cosmos's core value propositions around staking and interoperability persist regardless of macro conditions.
- Prior Fed tightening cycles - Crypto has rebounded strongly following previous rate hike cycles, suggesting resilience.
- Mainstream adoption may stabilize prices - Increased institutional investment could dampen volatility sensitivity to macro events.
- Persistent inflation - Cryptocurrencies are seen by some as an inflation hedge, a narrative that could strengthen if inflation persists.
Forecasts remain split on whether ongoing Fed rate hikes will continue hindering ATOM and crypto prices. But Cosmos's robust platform fundamentals may provide insulation against rate hike headwinds.
In summary, Cosmos has posted gains but remains mired in a downtrend within a risky macro backdrop. While oversold levels indicate a relief rally may be nearing, significant upside appears unlikely until technical resistance is broken and the macro climate improves. However, Cosmos boasts a growing ecosystem and strong staking activity that could allow it to overcome Fed rate impacts long-term. Patience and selective buying is recommended for ATOM traders until a clearer trend emerges.