Cosmos price rebounds 45% in one week despite Terra’s debacle — What’s next for ATOM?

Cosmos (ATOM) emerges as the largest gainer among the many high cryptocurrencies this Could 20, brushing apart the fears about its affiliation with Terra (LUNA), an algorithmic stablecoin mission whose market valuation fell by 99% final week.

Cosmos TVL down from $10M to $155K

ATOM’s worth elevated by over 10% intraday to virtually $12. The positive aspects appeared as part of a broader upside retracement that began on Could 12 when it had fallen to its eleven-month low close to $8. That marked round a forty five% worth restoration in virtually every week.

ATOM/USD every day worth chart. Supply: TradingView

The ATOM worth rebound occurred regardless of its mother or father chain, Cosmos Hub, witnessing large capital outflows from its liquidity swimming pools. Notably, the overall worth locked (TVL) with Cosmos dropped to round $155,000 on Could 20, in comparison with its year-to-date excessive of over $10 million, based on Defi Llama. 

Terra emerged as one of many main causes behind the drop since its liquidity swimming pools made up 92% of the general Cosmos TVL as of Could 9. However on Could 20, the mission’s stake within the Cosmos ecosystem was simply round 17%.

Cosmos TVL distribution. Supply: Defi Llama

In the meantime, a hawkish Federal Reserve had additionally contributed to the selloff throughout riskier belongings final week, hurting cryptos like Bitcoin (BTC), Ether (ETH), and ATOM in tandem, as Cointelegraph lined.

ATOM worth rebound sustainable?

From a technical perspective, ATOM stays on the danger of constant its decline in Q2/2022.

First, the Cosmos token’s 45% rebound accompanies a drop in its buying and selling volumes, suggesting a low dealer turnout behind the rally that, in flip, might result in a worth reversal. Second, the value seems to have shaped an ascending triangle, a development continuation indicator, as proven within the chart under.

ATOM/USD four-hour worth chart that includes ascending triangle setup. Supply: TradingView

As a rule of technical evaluation, ascending triangles shaped throughout a downtrend resolve after the value breaks under their decrease trendline and proceed falling till it reaches the extent at size equal to the triangle’s most peak.

Making use of the identical principle on Cosmos shifts ATOM’s draw back goal to $7.50 with the breakdown level round $10.35.

Bullish reversal situation

In some instances, nevertheless, ascending triangles in a downtrend might result in a development reversal as a substitute of continuation. Due to this fact, the bulls might try a breakout with a run-up to the triangle’s higher trendline close to $12.50.

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ATOM’s chance of constant its restoration is excessive if this happens significantly with rising buying and selling quantity. In doing so, the upside goal for ATOM/USD might once more be on the size equal to the utmost distance between the triangle’s higher and decrease trendline, as proven under.

ATOM/USD four-hour worth chart that includes ascending triangle’s reversal setup. Supply: TradingView

In different phrases, the bullish situation places ATOM’s worth en path to $17.25 by June, up round 45% from Could 20’s worth.

The views and opinions expressed listed here are solely these of the creator and don’t essentially replicate the views of Each funding and buying and selling transfer entails danger, it’s best to conduct your individual analysis when making a call.