ATOM joins the dip party late, but is the price protected?

The entire financial landscape is in turmoil. From the stock exchange to the crypto market, there are only numbers and flashing red candles everywhere.

However, as always, there are a few notable exceptions. In traditional US markets, stocks like NLSN and JNPR escaped their downtrend and closed in positive territory on Friday, while stocks like TSLA fell nearly 7%.

In the crypto market, the decline is clearly led by large-cap coins. However, some names like ATOM have managed to limit losses better than others.

Ox and Ox area, code level code

Despite joining the Dip Party late, it seems unlikely that ATOM will be able to hold current levels for long. The bearish intensity on the short-term chart appears to be even thicker at the time of this analysis.

At press time, ATOM is trading 26% lower on the 3-hour chart, compared to its December 3 high of $ 33.6. It is noteworthy that most of the losses occurred in the last 16 hours alone.

Source: TradingView

In such slow phases, fundamentals often come into play and support the price. For ATOM, however, things look bleak on this front.

The Altcoin’s stock-to-flow (S2F) model reflects a value of 16.58, while the inflation rate is 6%.

Typically, a higher S2F means less supply is coming into the market, resulting in more scarcity and less inflation. This will ultimately support the price of the asset.

The above indicators have barely changed since September and are still relatively low compared to other coins. Hence, it can be said that ATOM will have difficulty maintaining higher prices in the future.

The source: Messari

In the past 3 months, the Sharpe ratio has also deteriorated. In September the indicator fluctuated slightly around the mark 6. However, it has now not only entered negative territory, but has also fallen to its lowest level at -4.45.

Essentially, this means that investors are not being adequately compensated for the risks they are taking. If this continues, the market participants will gradually flee and therefore the selling pressure will increase, which will push the ATOM price further down.

The source: Messari

On the flip side, ATOM’s volatility is still under control, which means the price won’t move too much from that point on.

The source: Messari

So now, along with the token economy, it is just as important for the broader market to rebound in order for ATOM to continue its uptrend. If things improve in the next trading sessions, investors can expect this altcoin to move back towards $ 30. However, if things go bad, that opens the door to a drop to $ 20.

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