Here’s why ATOM gained 13% amid a major crypto decline
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The crypto that talks to other cryptos is gaining ground.
Important points
- Several factors, including bullish analysis by investment companies, have pushed Cosmos’ ATOM up.
- Cosmos is an interoperability crypto that offers secure ways for blockchains to work together.
- All crypto carries risks and there may be more clouds on the horizon for the industry.
Cosmos (ATOM) was one of the few top cryptos in the green this morning, up nearly 13% in 24 hours. The price has increased by over 2% in the last week and almost 15% in the last 30 days. In contrast, according to CoinMarketCap, market leaders Bitcoin (BTC) and Ethereum (ETH) have fallen by nearly 10% and 13%, respectively, over the past seven days.
Why Cosmos is on the rise
There is no obvious single reason for Cosmos’ strong performance in recent days. However, there are a number of contributing factors that have given ATOM some momentum.
1. Bullish investment analysis
Global Chief Investment Officer VanEck published an optimistic analysis of Cosmos and its potential in the coming years. It praised Cosmos’ secure cross-chain bridging capabilities, which is a central topic in the crypto industry. Many blockchains operate as individual silos and have difficulty communicating with other networks. Cosmos is one of the interoperability cryptos that solves this problem.
VanEck predicts that over 5,000 blockchains will be built on the network before 2030 due to Cosmos’ “superior technology.” The report states, “Cosmos Hub’s ATOM token is in a leading position to capture a significant share of the public blockchain market value, and we expect the price to perform according to this expectation.”
2. Internet security is imminent
The VanEck report drew particular attention to something called “internet security”. It essentially allows blockchains built in the Cosmos ecosystem to use the Cosmos Hub to secure themselves. A new blockchain can use the existing ATOM-backed blockchain to validate itself, rather than relying on its own – less developed – token and chain. According to Cosmo’s roadmap, the first step towards launching internet security is soon.
3. DeFi rumors
Finally, there is speculation on social media that some of the projects from the now defunct Terra (LUNA) ecosystem will move to Cosmos. Several smart contract cryptos are competing to attract Terra applications. Terra was built using Cosmos technology, adding weight to rumors that some decentralized finance developers will move activities there. However, other blockchains, such as Polygon (MATIC) have launched specific means to entice former LUNA apps.
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Should you buy?
It is a difficult time for the cryptocurrency industry and there are still clouds on the horizon. An uncertain wider economic climate and high likelihood of tighter regulation means that prices may continue to struggle in the short term. This is still a relatively new and unregulated industry, and there is much we do not know about how it will develop.
As an investor, the key question is whether you think Cosmos can perform well in the long term. Interoperability — the ability for cryptos to talk to each other — is critical to cryptocurrencies and the VanEck report is positive. Nevertheless, the analysts raise some concerns about Cosmos’ tokenomics and disputes between key developers. Do your own research and try to assess how Cosmos compares to similar projects like Polkadot (DOT) and Avalanche (AVAX).
Before you invest in some crypto, make sure you are on top of your other financial goals. An emergency fund with three to six months of living expenses is much more likely to see you through a potential recession than a risky crypto investment. Only invest money you can afford to lose and make sure crypto is a small percentage of your total investment portfolio. If you decide to buy, check out our best crypto apps and exchanges for places to buy Cosmos and other digital currencies.
