ATOM was among the biggest gainers on cryptocurrency boards this Wednesday as traders assessed its integration into the US-regulated crypto exchange Coinbase.
The Cosmos’ native token rallied 9 percent on a 24-hour adjusted timeframe, touching an intraday high level near $5.56, hours after Coinbase added support for staking ATOM rewards. Its gains appeared even as other top crypto assets showed signs of a downside correction.
“Starting today, eligible customers can easily start earning 5% APY on their Cosmos (ATOM) held on Coinbase,” the exchange announced. “Customers can securely keep their assets on Coinbase and instantly trade or withdraw their holdings and rewards when they want.”
An Ethereum-rival, Cosmos is a proof-of-stake blockchain that allows users to stake ATOM tokens to secure the network. In return, the stakers receive the so-called block rewards – again, derived in ATOM, by as much as 20 percent per annum.
Since its launch, the Cosmos core economic model has helped ATOM log a year-on-year gain of 150 percent.
Trouble Area
The latest ATOM rally came as a part of an extended pullback that followed a 57.26 percent price crash. Technically, the ATOMUSD exchange rate bounced off a medium-term ascending trendline that served as its support, forming higher highs on a three-day timeframe.
Cosmos is attempting to close above $5.46-resistance. Source: TradingView.com
In his earlier analysis, stock analyst Michaël van de Poppe called the $5.15-5.40 range a “troubled area.” That reflected the daytrader’s fears of a downside correction once ATOM closes above $5.15. Nevertheless, the token’s minor breakout above the said area raised its possibilities of testing $6.51 as its next upside target.
Noah Seidman, another market analyst, explained the bullish bias with a customized chart as shown below.
Cosmos bullish setup. Source: TradingView.com
“ATOM is sitting comfortably above its long term trend resistance-flipped-support,” he said. “Now above the 200EMA on the daily, clearly the bullish deviation helped pull up the long term average above the green trend line.”
ATOM Pullback Scenario
In a downside setup, ATOM/USD could correct lower based on profit-taking sentiment led by elsewhere losses. Macro-wise, the crypto market is still waiting for Bitcoin to break above its resistance levels above $11,000. But a long-delayed stimulus bill, coupled with US presidential election uncertainty, is keeping the benchmark cryptocurrency cautious.
Should a correction occur in the Bitcoin market, it could lead the altcoins lower as well. The setback would ensure that ATOM attempts to break below the Ascending Trendline. If that happens, then the Cosmos token could fall to as low as $2.57.