Cosmos: facilitate cross-chain asset and data exchange

Cosmos is a decentralized platform designed to enable different blockchains to exchange data and tokens while preserving their autonomy. Prior to Cosmos, blockchains were unable to communicate with each other. The platform’s technology allows seamless asset and data exchanges across blockchains.

Founded by developers Jae Kwon and Ethan Buchman in 2014, Cosmos was also developed and launched with assistance from the Interchain Foundation, a Swiss non-profit organization. The ATOM token is crucial for maintaining the interoperability of the various zones within the Cosmos network, and it can be used for staking, sending, holding, or spending purposes.

ATOM holders are empowered to vote on network upgrades, with voting power corresponding to the amount of ATOM staked.

It is noteworthy that each new independent blockchain within Cosmos is connected to the Cosmos Hub, which is powered by ATOM. Therefore, the value of ATOM may increase as more blockchains are developed on the network. However, investors should be aware that there is currently no cap on the supply of ATOM tokens, as the supply adjusts according to the amount of ATOM being staked.

While the Cosmos project is gaining popularity, its future success is largely dependent on how well it adapts to competitors like Polkadot, and regulatory challenges in the cryptocurrency market could also pose a threat.

Što zadržava budućnost?

While the beginning of 2023 saw positive performance for ATOM, the trend reversed in the last few days. ATOM has fallen by over 10% since February 21, and the potential for further declines remains.

On Friday, data revealed that the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, rose by 0.6% in January. This news raised concerns among investors that the US Federal Reserve may increase interest rates by 50 basis points in March.

“The headline and core PCE numbers were well above expectations. What worries us most is that the data since the last Fed meeting has been extremely strong. If the Fed had this data at the last meeting, they probably would’ve raised by 50 bps, and the tone from the press conference would’ve been a lot different.”

– Gene Goldman, Chief Investment Officer, Cetera Investment Management

The federal funds rate is now between 4.5% and 4.75%, the highest level since 2007. The key question is how long the Fed will maintain its restrictive policy to combat inflation. Many analysts are warning that the Fed may keep rates high for an extended period, raising the risk of a recession that could further affect financial markets.

Scott Wren, a senior global market strategist at Wells Fargo Investment, predicts that market volatility is likely to persist in the coming weeks. If Bitcoin falls below the $20,000 threshold, further sell-offs in the crypto market may accelerate.

Additionally, renowned hedge fund manager Ray Dalio recently referred to crypto as a “speculative asset,” claiming that it does not serve as an effective store of wealth, even though he praised blockchain technology. Dalio also emphasized the need to distinguish blockchain from digital currencies.

Technical analysis of ATOM

ATOM has dropped from $14.62 to $12.83 since February 21, 2022, with the current price at $13.13. ATOM may struggle to stay above the $12 mark in the coming days, and a break below this level could suggest a decline to $10.

Crucial support and resistance levels for ATOM

In the chart from May 2022, I’ve highlighted important support and resistance levels to help traders gauge potential price movements. While ATOM remains under pressure, a price increase above the resistance level at $15 could push the target to $17.

The current support level stands at $12, and if this is breached, it would signal a “SELL” and could open the path to $11. A further drop below $10, which represents a key psychological support level, could push the price toward $8.

Factors supporting a rise in ATOM price

The last few hours have been challenging for the crypto market, as data revealed a 0.6% inflation rise in January. The total market capitalization of all cryptocurrencies has dropped by around $40 billion, and Bitcoin has fallen below the $23,000 level.

The upside potential for ATOM is likely limited in the coming weeks. However, if the price rises above $15, the next target could be $17.

It’s important to note that any news indicating the Fed is becoming less aggressive in its monetary policy could be favorable for cryptocurrencies, potentially allowing ATOM to advance from its current price level if the Federal Reserve signals a slowdown in rate hikes.

Indicators pointing to further decline for ATOM

Cosmos (ATOM) has been under pressure since February 21, and investors should be prepared for another potential drop. The latest inflation data suggests that the US Federal Reserve may raise interest rates by 50 basis points in March, which has dampened the optimism in the cryptocurrency market.

The current support level for ATOM is $12, and if the price falls below this threshold, the next target could be $11 or even lower.

Uvidi analitičara i stručnjaka

The fundamentals of Cosmos (ATOM) are closely linked to the broader cryptocurrency market. The recent pause in bullish momentum can be attributed to higher-than-expected US inflation data, the likelihood of the Federal Reserve continuing interest rate hikes, and significant long liquidations. Crypto analytics firm The Block noted a sharp decline in investor sentiment, suggesting further downside risk for Bitcoin. As a result, ATOM may struggle to maintain its support level at $12.

Mike McGlone, Senior Macro Strategist at Bloomberg Intelligence, stated that the US stock market could experience additional losses in the coming weeks. Investors should be mindful that the crypto market has shown a high correlation with US equities.

Izjava o odricanju od odgovornosti: Cryptocurrency is highly volatile and not suitable for all investors. Never risk money you cannot afford to lose. The content provided on this site is for educational purposes only and should not be considered as investment or financial advice.