The price of the Cosmos cryptocurrency is still near the maxima of a week ago despite the deteriorating sentiment around digital assets. The token similarly to the infamous Luna project attracts investors with high returns from passive investment in blockchain so-called staking:
- The successful Ethereum Merge did not cause a surge in the cryptocurrency's value. Digital assets are reacting with declines to the prospect of rising interest rates in an uncertain macroeconomic environment;
- Cosmos is still nearly 10% above valuations as of September 14. The price has already bounced once off the 200-session average, which marks a downward trend. The blockchain boasts more than $60 billion worth of AUM of digital assets and interoparity, which has so far been a problem for many legacy projects like Ethereum;
- Luna/Terra, among others, were built on the Cosmos blockchain.
- In September, cryptocurrency analytics firm and protocol provider Delphi Digital identified the Cosmos blockchain as the place to build new cryptocurrency projects;
- Protocols that left the Luna/Terra blockchain after its collapse are also migrating to the chain. Recall that Luna also guaranteed double-digit staking profits thanks to Anchor Protocol by which capital flowed into the project from investors seeking stable returns in a losing cryptocurrency market;
- As a result of the Cosmos ecosystem's popularity, ATOM's value is also growing as new De-Fi protocols and decentralized applications work together within the blockchain's security system. The Inter-Blockchain Information Protocol (IBC) creates a kind of internet between all projects, enables the transfer and exchange of cryptocurrency and cooperation between protocols which ultimately translates into volume growth;
- According to Staking Rewards, as much as 66.75% of the available supply of Cosmos (the native ATOM token) is currently staked. The reward from staking is 17.75% per year. In addition, the blockchain is expected to trigger so-called liquid staking which, once available in the ecosystem, is likely to cause buying pressure on the token and increase its valuation, which investors are counting on;
- Some of the Cosmos ecosystem projects (including COMDEX) plan to create their own stablecoin (CMST). It is likely that staked (i.e. locked) assets in the platform will support a $1 'peg' of stablecoins;
- Recall that staking is a form of entrusting one's own token assets to the blockchain protocol, which through them validates transactions on the blockchain. This is the form in which Ethereum is currently working, thanks to its move to Proof of Stake;
However, the case of Luna indicated that any advanced system may have systemic flaws and vulnerabilities, and following the old 'no free lunch' rule, the rewards of staking may fall when blockchain's popularity declines. Similarly, a threat to the ecosystem could be the creation of a stablecoin spread, with no physical dollar backing whatsoever, which in practice could mean that faith in its value ($1) among investors is likely to be subject to change in a hypothetical situation of internal network problems.
Staker addresses on the Cosmos blockchain have been growing exponentially for the past 7 days and indicate more than 74,000 entities. Source: StakingRewards
Projects built in Cosmos are gaining popularity. The monthly winner seems to be Kujira with 82% monthly growth. At the same time, we already see one fallen protocol Echelon, whose value dropped by 96% during the month. Source: DefiLama
The chart shows Cosmos' capitalization (purple line) and trading volume (green bars) The recent drop in valuation on high volume from September 10 when the token bounced off its 200 SMA may herald weakness. Source: TokenTerminal
Cosmos, D1 interval. The price of the cryptocurrency has risen 300% from June lows near $5 per token. However, the bulls have encountered significant support in the form of the 200-session average on the daily chart, which runs at $15.5. The RSI, which is heading south at 59 points, also looks worrisome, although it is worth pointing out that the RSI has been at high levels for many weeks and capital continues to flow into the cryptocurrency. Source: xStation5
Bitcoin, D1 interval. Bitcoin's price, contrary to the Cosmos described above, still lacks more than $10,000 in valuation to climb above the 200-session average. At the same time, the SMA200 so far coincides with the 23.6 Fibo retracement, which may indicate that this will be the first key level that the bulls will want to regain. On the chart, we can see that the bottom below $19,000 has been pierced twice and demand has managed to stop the declines twice. Since the Ethereum merge, however, we have seen sentiment weakening again. If supply manages to push Bitcoin below $19,000 again, it could become a harbinger that the cryptocurrency will look for lows below the June lows. As long as the bulls defend the key level, a formation resembling a double bottom could herald a rebound and the exhaustion of selling forces. Source: xStation5
