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

Published at: Feb. 13, 2021

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

Analysts are attributing the rally of ATOM to two major fundamental factors. First, in recent weeks, layer one blockchain protocols, like Avalanche (AVAX) and Polkadot (DOT) have gone through a major rerating.

Second, the utility of ATOM that enables holders of the cryptocurrency to earn through swap, gas, and transaction fees could make it more compelling for investors.

The rerating of layer-one blockchains

The term rerating is used in the cryptocurrency market to describe when the value of a cryptocurrency rises rapidly after stagnating for a prolonged period.

Typically, rerating occurs when the market finds that a cryptocurrency is undervalued due to fundamental reasons or a certain catalyst buoys the potential of the blockchain protocol.

Cosmos is primed for a rerating because other layer-one blockchain protocols, like Polkadot, have seen massive rallies throughout January and February.

Currently, as of Feb. 13, the valuation of Cosmos hovers at around $5 billion. In comparison, Polkadot’s valuation is at around $27 billion, more than five times higher.

More importantly, compared to other layer one blockchain protocols, Cosmos has major decentralized platforms and blockchain projects launched on top of it.

Projects on top of Cosmos valued higher than ATOM 

Most notably, Terra and Binance Smart Chain are both based on the Cosmos blockchain. The valuation of the two blockchain projects alone are above $22 billion.

Technically, BNB is the native token of both Binance Smart Chain and the Binance ecosystem, but nonetheless, the valuation of the two projects alone surpass that of Cosmos.

A pseudonymous DeFi investor known as “SpiderCrypto” said ATOM is undervalued compared to other blockchains. The investor said:

“Also @cosmos $ATOM is undervalued relative to other blockchains. So many great projects using tendermint / cosmos and you don't even know anon. $10b marketcap and will explode like $avax.”

A pseudonymous Cosmos validator Immasssi also emphasized that the tokenomics of ATOM, which allows users to benefit from the fees generated from the Cosmos ecosystem, makes ATOM more attractive.

Similar to DeFi projects that have cash flow and a token that lets users earn through staking, the validator said ATOM holders will earn transaction fees from packets routed through the Cosmos hub. He said:

“$ATOM holders will earn tx fees for packets that are routed through the hub. This includes all #data. Additionally atom holders will earn swap fees, gas fees & tx fees from the upcoming AMM. Furthermore earning from shared security. Once you realize what that means for ATOM.”

 Additionally, the long-term sentiment score for ATOM has risen significantly this year alongside Terra LUNA's, suggesting that the rerating of Cosmos may continue, particularly if the DeFi sector continues to grow.

Tags
Markets
Altcoin
Market Analysis
Defi
Cosmos
Related Posts
Altcoin Roundup: Bitcoin price crash is a reminder to put fundamentals over fear
In bull and bear markets, wise cryptocurrency investors know that the primary focus should be on project longevity rather than jumping on every short-term price movement. As the crypto ecosystem expands and new sectors arise, protocols that offer the most value to the community stand the best chance at long-term survival and price appreciation. The goal of this newsletter is to take a more thematic, macro view of niche sub-sectors within the cryptocurrency market and identify projects whose signal they will be successful within the space. It isn’t about the token price; it’s about the tech, the fundamentals of the …
Blockchain / May 22, 2021
3 possible reasons why Polkadot is playing second fiddle in the L1 race
2021 was a sort of "coming-of-age" for many layer-one (L1) blockchain protocols because the growth of decentralized finance (DeFi) and nonfungible tokens (NFTs) forced users to look for solutions outside of the Ethereum (ETH) network where high fees and network congestion continued to be barriers for many. Protocols like Fantom (FTM), Avalanche (AVAX) and Cosmos (ATOM) saw their token values rise and ecosystems flourished as 2021 came to a close. Meanwhile, popular projects like Polkadot (DOT) underperformed, comparatively speaking, despite the high expectations many had for the sharded multi-chain protocol. Setting aside the specific capability that each protocol offers in …
Adoption / Jan. 22, 2022
Terra, Avalanche and Osmosis lead the L1 recovery while Bitcoin searches for support
The layer-one (L1) ecosystem has received increased attention in recent months as users search for new investment opportunities in the Cosmos (ATOM), Fantom (FTM) and NEAR. Following January's market sell-off, where Bitcoin (BTC) price dropped to bottom below $34,000, much of the L1 field has struggled to regain its momentum. According to data from Delphi Digital, since the BTC bottom on Jan. 24, the only L1 to experience a notable gain in price include Terra (LUNA), Avalanche (AVAX) and Ethereum (ETH). Terra ecosystem growth The price growth seen in LUNA was in large part due to the announcement from the …
Blockchain / March 5, 2022
Which tokens should you buy and hodl in 2022? | Find out now on The Market Report live
“The Market Report” with Cointelegraph is live right now. On this week’s show, Cointelegraph’s resident experts discuss which tokens you should buy and hodl in 2022. But first, market expert Marcel Pechman carefully examines the Bitcoin (BTC) and Ether (ETH) markets. Are the current market conditions bullish or bearish? What is the outlook for the next few months? Pechman is here to break it down. Next up, the main event. Join Cointelegraph analysts Benton Yaun, Jordan Finneseth and Sam Bourgi as they debate which tokens you should buy and hodl right now. Will it be Bourgi’s picks? He has selected …
Decentralization / March 15, 2022
Most of the crypto market is down, but Cosmos (ATOM) price is up — Why?
The Ethereum Merge has finally happened. It’s over, and fortunately it went smoothly without any major hiccups. As predicted by many, the event turned out to be a “buy the rumor sell the news” style event, or perhaps, the hotter-than-expected consumer price index print on Sept. 12 was the real catalyst that pushed the market in its current direction. Regardless of the reasons for this week’s downturn, the Merge is over and in its wake, bulls are left holding a whole lot of nothing. It’s likely that a new bullish narrative will need to emerge, or analysts will need to …
Bitcoin Price / Sept. 15, 2022