Cosmos: New ‘interchain security developments’ has had this effect on ATOM

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ATOM has so far ral­lied by more than 30% from its lat­est local low. The cyp­tocur­ren­cy extend­ed its down­side dur­ing last week’s cryp­tocur­ren­cy mar­ket crash, and the healthy recov­ery might be a sign of things to come.

ATOM trad­ed at $11.78 at the time of writ­ing, a slight drop from its 24-hour high of $12.48. How­ev­er, it is up by rough­ly 31% from its 12 May low of $8.55. The last time that ATOM’s price was that low was in August 2021. It also rep­re­sents an 80% dis­count from its all-time-high at $44.56.

The heavy dis­count makes ATOM an attrac­tive pur­chase espe­cial­ly with­in the low­er price range achieved last week. Some, seem to think so, giv­en the healthy accu­mu­la­tion that took place in the last few days. A zoomed out look at the charts reveals that ATOM’s lat­est trend rever­sal took place at a major sup­port line.

Source: Trad­ingView

Aside from the sup­port retest, ATOM’s dip pushed well into the RSI’s over­sold zone. The rever­sal took place cour­tesy of healthy accu­mu­la­tion accord­ing to the MFI indi­ca­tor. ATOM bears have also been los­ing their momen­tum ever since it dipped into the over­sold, hence paving the way for a recovery.

Can ATOM’s interchain security developments contribute to the rally?

ATOM’s ral­ly has unfor­tu­nate­ly not been as pro­nounced as one would expect, giv­en the mag­ni­tude of the dip. This is like­ly because there is still uncer­tain­ty espe­cial­ly on the like­li­hood of more downside.

The Cos­mos blockchain is draw­ing clos­er to the launch of its inter­chain secu­ri­ty. The lat­est update about the launch was announced pri­or to the Ter­ra UST attack which con­tributed to the entire cryp­to crash.

The inter­chain secu­ri­ty launch can poten­tial­ly con­tribute to more investor con­fi­dence, thus poten­tial­ly strength­en­ing its recov­ery. ATOM’s devel­op­er activ­i­ty met­ric on San­ti­ment shows a sig­nif­i­cant increase in devel­op­er activ­i­ty a day after the inter­chain secu­ri­ty update was released.

Source: San­ti­ment

ATOM’s sup­ply held by whales met­ric reg­is­tered a slight increase in the last 24 hours. This might be a sign of improv­ing investor con­fi­dence. The recov­ery in the Binance deriv­a­tives fund­ing rate enforces the same obser­va­tion, sig­ni­fy­ing a return of investor interest.

Conclusion

ATOM’s ral­ly in the last few days might sig­ni­fy the start of more upside in the next few weeks. How­ev­er, this is not a guar­an­tee that the mar­ket will recov­er. There is still sig­nif­i­cant risk of addi­tion­al down­side and a poten­tial bear trap, hence the need to tread cautiously.



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