Cosmos Bull Case: Why Is ATOM Rising?

Cosmos (ATOM), described as "Blockchain 3.0," is an ecosystem of blockchains that has been created to enhance scalability features and improve the interoperation of blockchains with each other.

According to the data from CoinGecko, ATOM is up by 16.6% in the last 30 days despite the wider market being bearish due to a lack of trading volumes. The token is 73.7% low than its all-time high witnessed in January 2022 at $44.45 while it is up by almost 900% from its all-time low of $1.16 witnessed in March 2020.

Tendermint, an integral part of the Cosmos (ATOM) ecosystem, was co-founded by Jae Kwon, Zarko Milosevic and Ethan Buchman while Kwon being the chief architect who stepped down as CEO of Tendermint in 2020.

The founders describe Cosmos (ATOM) as the "Internet of blockchains" as its goal is to create a network of blockchain networks that is maintained using open-source tools. Hence, the main focus of the Cosmos blockchain is enhancing interoperability and scalability.

The Cosmos blockchain ecosystem consists of the Cosmos Hub blockchain which is powered by the native token of the platform, ATOM. According to the Cosmos whitepaper, the network prioritizes the requests of other blockchains rather than its own to fulfill its goal of quick data transfers between all blockchains built on top of it.

One of the reasons why Cosmos (ATOM) is on a rise is praise from the global investment manager, VanEck, which recently published an overview of the potential of Cosmos in the coming years.

VanEck added in the report that "a substantial portion of future public blockchains will exist in the Cosmos," adding that over 5,000 blockchains will be built on the same before 2030 because of Cosmos's "superior technology."

"The Cosmos Hub's ATOM token is in a premier position to capture a substantial share of the public blockchain market's value, and we expect its price will perform according to this expectation," said VanEck's report.

VanEck has more than $50 billion in assets under management (AUM) and has become one of the biggest ETF providers following the debut of the Bitcoin futures ETF last year.

Regarding the Cosmos Hub, the Cosmos whitepaper states that it "connects to many other blockchains (or zones) via a novel inter-blockchain communication protocol," adding that it also "tracks numerous token types and keeps record of the total number of tokens in each connected zone."

"Tokens can be transferred from one zone to another securely and quickly without the need for a liquid exchange between zones, because all inter-zone coin transfers go through the Cosmos Hub," the whitepaper says.

In its report, VanEck also pointed out something called "internet security." This feature of Cosmos Hub is expected to cause a growth in the adoption of the blockchain. This will allow blockchains built on the Cosmos Hub to use the security features of the native blockchain for their own platforms.

Hence, those projects who don't want to focus much on security can opt for Cosmos' "internet security."

Additionally, there are also rumors that the projects that were based on the Terra blockchain, which is now defunct, are also migrating to the Cosmos ecosystem, according to Nasdaq.com.

According to DefiLlama, Cosmos Hub (ATOM) is the 110th biggest blockchain network in terms of Total Value Locked (TVL) and the top three contributors include Kava (KAVA), a Layer-1 blockchain focused on scalability; Osmosis (OSMO), a decentralized exchange (DEX); and THORChain (RUNE), a decentralized liquidity protocol.

The wallet data from EtherScan does not show any major wallet holding huge quantities of ATOM tokens which suggests that the Cosmos project is genuine as well.

The Cosmos weekly chart's analysis using the relative strength index (RSI) and Accumulation/Distribution line shows that there is an increased demand among buyers for the ATOM token.

The RSI indicator shows when a cryptocurrency is being overbought or oversold while the A/D line shows when buyers are accumulating or selling their ATOM holdings.

So, as seen in the chart above, the A/D line has initiated a short uptrend and is rising while the weekly chart shows eight consecutive bullish weeks for the ATOM token. This means that demand for the token is quite high over the past few weeks.

Moreover, the RSI line shows a value of 41.86 which means that on the weekly chart, ATOM is still bearish but the gradient of the line has been steadily rising which confirms that buyers are taking advantage of lower prices.

Despite the LUNA-UST crash, it seems that the crypto investors are still supporting projects with sound technology backing them. However, it remains unclear if a bank run, similar to LUNA, will happen on the blockchains existing on the Cosmos Hub blockchain.