Cosmos Hub (ATOM) rises 10% after news of Kujira stablecoin

Last Updated: 25 August 2022

The price of Cosmos has risen 10% today. The corresponding cryptocurrency, Atom, is now trading at 12.94 euros. Is this because of Kujira and the new stablecoin? Time to dive into the charts!

Share price Cosmos Hub (ATOM) rises 10%

Last night at 23:00 hours, the price of Cosmos briefly reached 13.34 euros. In the meantime, the value is 0.30 euros lower, but that does not detract from the impressive increase. This is not the highest value of the year. In January, Cosmos was trading at 39.22 euro, which was also the highest value of the currency ever.

Technical analysis Cosmos (ATOM)

What else do we see on the charts? For that, we need more detail, and it’s time for Tradingview. Below, each candle is for 1 day. Since 16 June, the price of Cosmos has been in an upward channel, represented by the orange lines.

The blue line indicates the moving average of the past 200 candles, that is to say, the past 200 days. The black line is looking at the average of a somewhat shorter period, namely the past 50 days.

Since 16 July, the black line is serving as support, not only for the candles but also for the orange channel. Just under a week ago, the price broke through the orange channel but found support on the 50MA. It is now important to get back on track in the long term. For this, the price has to rise to just under 16 euros.

In March, the black line dropped below the blue line. This means that the price is doing worse in the short term than in the long term — this is called a death cross. This is called a golden cross if the short-term line exceeds the long-term line again. This is very bullish for the price and indicates that the market is ready to invest at that moment.

But there is more to it. A real stablecoin has been announced for the Cosmos ecosystem. Not by Cosmos itself but by Kujira.

Cosmos gets stablecoin from Kujira

Initially, Kujira developed their stablecoin project on Terra’s blockchain, but after the collapse of this ecosystem, the project was migrated to Cosmos.

The stablecoin is called USK and is intended to have a value equal to the US dollar. Kujira seems to have borrowed from the wrong party, as they use cryptocurrency as collateral for their stablecoin. Terra also did this, for their own stablecoin they used their other crypto Luna to keep the price at 1 dollar.

Learning from Terra’s mistakes

USK will be supported by the crypto Atom and later Kuji will be added. This is the token of Kujira. Users can exchange these two coins for the stablecoin USK. In theory, if many traders exchange their Atom for USK, this is good and bad for the exchange rate. This means that there will be a lot of selling, but it also means that there will be fewer coins in circulation.

The whole project smells very much like what went wrong at Terra, but hopefully, they will learn from their mistakes and do things differently.

In a blog post, the team behind Kujira wrote that the inspiration to develop USK came from the decentralised lending protocol MakerDAO and its stablecoin DAI.

Author

  • Florian Feidenfelder is a technical analyst with many years trading experience in the stock exchange and crypto markets. He has broad experience in forex trading, coaching, and funds management.

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