24 JAN 2022 (MON)- Cosmos Network (ATOM) Report Card

By quantdoge | Daily Crypto Risk Report | 24 Jan 2022


Investment Disclaimer:

  • I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.
  • Past performance presented here is not an indicator of future performance.
  • This post expresses my own opinion about the cryptocurrency mentioned herein and is not an offer to buy or sell, or a solicitation of any offer to buy or sell the cryptocurrency mentioned in this post.
  • I do hold a long position in ATOM as a token holder.

1A. Top 3 Good News for ATOM HODLERS !!!

1B. Top Bad News for ATOM HODLERS !!!

2. How Cosmos Performs Relative to Other Cryptos ?

Performance of All Cryptos Under Quantdoge Watchlist since 2021 (Sorted by % Return)

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ATOM has undergone 353.33% return from USD 6.4562 to USD 29.2678 since 01 Jan 2021. ATOM is the 18th best performing crypto assets among others here.

3. How Resilience Cosmos Is Towards Bitcoin Crash Relative to Other Cryptos ?

Historically, all altcoins are somewhat dependent on Bitcoin price movement and it’s often the case where if Bitcoin falls, most altcoins would follow.

Top 3 Cryptos That Are Most Resilient To Bitcoin Crash During Each of BTC 4 Largest Crashes in 2021

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ATOM has proven resilience against BTC crash in 0 out of the 4 instances.

During the last 4 BTC market crashes,
When BTC dropped by -13.47 %, ATOM returned -38.76 % at 20 May 2021,
When BTC dropped by -13.13 %, ATOM returned -18.99 % at 22 January 2021,
When BTC dropped by -12.16 %, ATOM returned -14.01 % at 13 May 2021,
When BTC dropped by -11.39 %, ATOM returned -19.38 % at 22 June 2021

4. Technical Analysis on Cosmos

4.1. Volume Weighted Average Price (VWAP)

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VWAP is a technical indicator used by a trader to gauge the overall trend of an asset price movement. VWAP line (orange line) represents the volume-weighted average price (average price here is defined as the average of high, low and close prices) while close price line (blue line) represents the price when ATOM is closed at the end of every single day. 

Whenever blue line (close price) is above orange line (VWAP), it indicates that the asset is gaining momentum and being traded higher than its average price level. This would represent a 'buy' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'sell' opportunity, anticipating that the price of ATOM (blue line) to fall to its average level (orange line).

Whenever blue line (close price) is below orange line (VWAP), it indicates that the asset is losing momentum and being traded lower than its average price level. This would represent a 'sell' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'buy' opportunity, anticipating that the price of ATOM (blue line) to rise to its average level (orange line).

As of 23 Jan 2022, VWAP is suggesting that ATOM has lost significant amount of momentum as crypto market crashes, with its current close price trading below its week-long and month-long volume weighted average price. It may be undervalued now, but this might not be an appropriate time to mass purchase ATOM as market continues to fall and nobody knows what price level constitutes the bottom. 

4.2. Moving Average Convergence Divergence (MACD)

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MACD is often used by trader as a momentum indicator. There are 2 lines that form the above charts, namely MACD (12, 26) lines and Signal(9) line, while the histogram is calculated by subtracting Signal (9) from MACD (12,26). Histogram would fall to the negative territory whenever MACD (12, 26) is trending at a lower level than Signal (9) and rise to the positive territory whenever MACD (12,26) is trending at a higher level than Signal (9).

MACD (12, 26) is computed by subtracting the 26-day exponential moving average (EMA) of ATOM closing price from its 12-day EMA. 
Signal (9) on the other hand is calculated as the 9-day EMA of MACD (12,26). 

As MACD (12, 26) goes higher away from Signal (9), it signifies that ATOM is gaining momentum and whenever it goes trends at a lower level than Signal (9),it signifies that ATOM is losing momentum. 

As of 23 Jan 2022, MACD is suggesting that ATOM has lost a significant amount of momentum.

4.3. Bollinger Band

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Bollinger band is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. Its chart made up of 4 lines, namely:

- SMA (20) (blue line), which is the 20-day simple moving average price of ATOM
- Upper Band (orange line), which is computed by adding 2 standard deviations of ATOM on SMA (20)
- Lower Band (red line) , which is computed by subtracting 2 standard deviations of ATOM from SMA (20)
- Close (green line), which is the daily closing price of ATOM

Whenever close line (green) touches the lower band (red), it indicates that ATOM is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever close line (green) touches the upper band (orange), it indicates that ATOM is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 23 Jan 2022, Bollinger Band is suggesting that ATOM has been massively oversold during the recent crash and it's now trading within the undervalued zone. 

4.4. Relative Strength Index (RSI)

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Just like Bollinger Band, Relative Strength Index is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. There are 2 psychological levels, i.e. 30 and 70 in RSI. Whenever the RSI reaches 30, it indicates that ATOM is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever RSI reaches 70, it indicates that ATOM is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 23 Jan 2022, RSI is suggesting that ATOM is neither overbought nor oversold.

4.5. Price and Volume Analysis

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ATOM is attracting way more active daily trading volumes in Jan 2022 as compared to Dec 2021 as its price became more volatile.

Based on the technical analysis presented above, quantdoge does think that ATOM is undervalued, but it is not be the right time for me to mass purchase ATOM now as crypto market continues to fall and nobody could tell where is the real bottom as of now. However, I could be wrong, hence please make your careful due diligence before making any financial decision.

5. Cosmos Risk Profile

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Based on the 100-day 95% historical Value-at-Risk (VaR) profile of Cosmos defined above, ATOM seems to trade at a higher risk level on 23 Jan 2022 as compared to 10 days before on 13 Jan 2022, with its biggest pullback being seen at -16.61% on a single day during the last 100 days. However, I could be wrong, hence please make your careful due diligence before making any financial decision.

The probability distribution chart of Cosmos daily return has been flattened with fat tails (i.e. having less probability of staying stagnant around 0% range and has a much greater probability of either losing more than 20% or gaining more than 20%), indicating that ATOM is now becoming more volatile.

6. Google Trends Analytics

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cosmos blockchain reached its peak in Google Search on 2021-12-26 00:00:00 with a Google Score of 100
Over the last quarter, cosmos blockchain Google Score has increased 75.21 % from 30.25 to 53.0
Over the last 6 months, cosmos blockchain Google Score has increased 74.34 % from 30.4 to 53.0

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Over the last month, cosmos blockchain was most sought after from France, Canada and Germany.

These 3 countries are classified by World Bank as high-income nations, hence, a high interest from these geographical regions are bullish to ATOM as their citizens are likely to have higher risk appetite and more spare cash to venture into the crypto space.

7. Developer Activity Analytics

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Fork

Fork refers to the amount of time where the Github repo of current cryptocurrency is being copied. Higher fork number could mean that this cryptocurrency project is getting more interest in the developers community who likes to explore more on the deep technical of this project.

Cosmos forks increased 33.51% from 185 to 247 in the past year.

Star

Star refers to the number of developers who bookmark the Github repo of current cryptocurrency. Higher star number could mean that this cryptocurrency project is getting more general interest in the developers community.

Cosmos stars increased 15.77% from 907 to 1,050 in the past year.

Pull Request

Pull request contributor refers to developer who has made a successful improvements/ modifications on the Github repo of this current cryptocurrency project. Higher number of pull request contributors could mean that there is a high number of commitment given by developers to this cryptocurrency project.

However, a low number also could mean that the developer community of this project applies a strict standard when it comes to code review, so only developers who have published a high quality code with highly impactful features got approved.

Cosmos pull request contributors remain stagnant at 21.0 in the past year

8. Binance Futures Analytics

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There are more traders taking long position on ATOMUSDT futures as compared to the shorters despite the market crash.

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Long-short ratio of BTCUSDT, ETHUSDT and ATOMUSDT futures fall sharply after 21 Jan, however, all of them still have a long/short ratio of greater than 1, indicating that there are more people betting that the crypto market would recover than those who are betting the market to fall further. On a comparative basis, the long-short ratio of BTCUSDT and ETHUSDT are way higher than ATOMUSDT, indicating that traders prefer to bet on crypto assets that are more stable and have relatively higher market cap like Bitcoin and Ethereum. It's a risk-off mode now in the crypto market.

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BTCUSDT futures have the highest buy-sell volume ratio while ATOMUSDT has more sell volumes than buy volumes at the time of writing. This would be an indication that traders prefer to hold on/ open a long position on Bitcoin as a relatively less risky asset as compared to other relatively volatile assets like ATOM. This sounds like a risk-off sentiment.

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quantdoge
quantdoge

Data scientist in crypto and blockchain space.


Daily Crypto Risk Report
Daily Crypto Risk Report

This blog was created by quantdoge, a data scientist in the cryptocurrency and blockchain space to publish daily risk reports on different cryptocurrencies. All published reports in this blog were analyzed with in-house algorithmic trading and quantitative risk management technology. ** Investment disclaimer: ** I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.

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