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ATOM rallies 100% in every week: What’s behind the rerating of Cosmos?

02/13/2021

ATOM, the native token of the Cosmos blockchain, has ralled strongly previously week for a number of elementary causes.

ATOM, the native cryptocurrency of the Cosmos blockchain protocol, has rallied by over 100% previously week. 

Analysts are attributing the rally of ATOM to 2 main elementary components. First, in current weeks, layer one blockchain protocols, like Avalanche (AVAX) and Polkadot (DOT) have gone by a significant rerating.

Second, the utility of ATOM that allows holders of the cryptocurrency to earn by swap, fuel, and transaction charges may make it extra compelling for buyers.

ATOM/USDT 1-day value chart (Binance). Supply: TradingView.com

The rerating of layer-one blockchains

The time period rerating is used within the cryptocurrency market to explain when the worth of a cryptocurrency rises quickly after stagnating for a chronic interval.

Usually, rerating happens when the market finds {that a} cryptocurrency is undervalued resulting from elementary causes or a sure catalyst buoys the potential of the blockchain protocol.

Cosmos is primed for a rerating as a result of different layer-one blockchain protocols, like Polkadot, have seen large rallies all through January and February.

At present, as of Feb. 13, the valuation of Cosmos hovers at round $5 billion. Compared, Polkadot’s valuation is at round $27 billion, greater than 5 occasions greater.

Extra importantly, in comparison with different layer one blockchain protocols, Cosmos has main decentralized platforms and blockchain initiatives launched on prime of it.

Initiatives on prime of Cosmos valued greater than ATOM 

Most notably, Terra and Binance Good Chain are each primarily based on the Cosmos blockchain. The valuation of the 2 blockchain initiatives alone are above $22 billion.

Technically, BNB is the native token of each Binance Good Chain and the Binance ecosystem, however nonetheless, the valuation of the 2 initiatives alone surpass that of Cosmos.

A pseudonymous DeFi investor referred to as “SpiderCrypto” mentioned ATOM is undervalued in comparison with different blockchains. The investor mentioned:

“Additionally @cosmos $ATOM is undervalued relative to different blockchains. So many nice initiatives utilizing tendermint / cosmos and you do not even know anon. $10b marketcap and can explode like $avax.”

A pseudonymous Cosmos validator Immasssi additionally emphasised that the tokenomics of ATOM, which permits customers to profit from the charges generated from the Cosmos ecosystem, makes ATOM extra engaging.

Much like DeFi initiatives which have money movement and a token that lets customers earn by staking, the validator mentioned ATOM holders will earn transaction charges from packets routed by the Cosmos hub. He mentioned:

“$ATOM holders will earn tx charges for packets which can be routed by the hub. This contains all #knowledge. Moreover atom holders will earn swap charges, fuel charges & tx charges from the upcoming AMM. Moreover incomes from shared safety. When you understand what meaning for ATOM.”

ATOM vs. LUNA long-term sentiment rating. Supply: TheTie

 Moreover, the long-term sentiment rating for ATOM has risen considerably this 12 months alongside Terra LUNA’s, suggesting that the rerating of Cosmos could proceed, significantly if the DeFi sector continues to develop.