ATOM Price Prediction 2023
You need to understand some basics before we can dive into the ATOM price prediction for 2023.
Cosmos is an ecosystem of independent parallel blockchains, each powered by classical Byzantine Fault Tolerance (BZT) consensus algorithms, such as Tendermint. Not to be confused with the Cosmos ecosystem, Cosmos Hub (ATOM) is one of the many blockchains on this network.
Cosmos Hub connects to several other blockchains (aka zones) via the Inter-Blockchain Communication Protocol (IBC) – a state-of-the-art interoperability protocol. At the time of writing, the primary role of ATOM is to secure Cosmos Hub through a staking mechanism.
Source: Cosmos ecosystem
Cosmos Hub and ATOM
Cosmos Hub serves as the economic centre of the Cosmos ecosystem, providing crucial services to the ‘Interchain’ – a new internet consisting of an extensive network of interconnected blockchains. These services include the following:
• The blockchain operates a next-gen DEX, Gravity DEX, allowing for quick and cheap cryptocurrency swapping across the Interchain.
• The Interchain Security feature positions ATOM at the centre of security for multiple chains in return for additional staking rewards.
• As an ecosystem router, the blockchain establishes IBC connections with compatible chains and operates decentralised bridges with ecosystems such as Bitcoin (BTC) and Ethereum (ETH).
• The blockchain is at the ecosystem's crossroads and is, hence, extremely secure. This makes the blockchain ideal for serving as an asset custodian and account management hub.
We can see that ATOM plays a significant role in securing the above services. In return, staking rewards and transaction fees are distributed to ATOM stakers. The cryptocurrency serves as a voting mechanism in governance as well.
We can also see that the Interchain Security feature may play an important role in the ATOM price prediction for 2023. The Interchain Security protocol went live in January, so ATOM may pick up significant momentum in Q1 2023. Let us explore the cryptocurrency's market cap and historical data to understand better ATOM price prediction and its potential ceiling.
ATOM market cap and historical data
The crypto asset has an infinite token supply, with a circulating supply of nearly 300M, a market cap of just over $3.4B, and a 24-hour trading volume of ~$200M – all at the time of writing.
If we look at historical price data over the previous month, the crypto token has experienced a significant surge in price, with a low of $8.96 on 20 December, 2022, and a high of $13.30 on 14 January, 2023. In other words, ATOM grew in price by nearly 50% in this interval! At the time of writing, the cryptocurrency is valued at $14.44.
ATOM achieved $15.57 on 6 November, 2022, and fell to $8.64 on 17 December, 2022. Truth be told, the crypto token had a volatile year, as did most in the crypto space.
If we look at statistics in 2022, ATOM reached an all-time high of $44.45 on 17 January, 2022, before plummeting to $6.32 on 17 June, 2022.
So far, we have explored the importance of Cosmos Hub and how ATOM is at the epicentre of the blockchain. We also dived into historical data and discovered that ATOM had a year of many highs and lows in 2022.
To understand how ATOM may fare in 2023 and make a price prediction, we need to understand the importance of Cosmos in the general scheme of things, ecosystem features/collaborations that may spark further interest in ATOM, and the health of the crypto sphere at large.
ATOM price prediction: factors to consider
To make an ATOM price prediction for 2023, here are some factors to consider:
Interchain Security rollout
A key factor to consider in Q1 2023, especially, is the importance of the Interchain Security feature rollout. Having launched in January 2023, the Interchain Security protocol may play a vital role in the further adoption of the blockchain ecosystem.
Cosmos is an ecosystem of more than 200 blockchains, the central blockchain of which is Cosmos Hub. The blockchain ecosystem previously allowed developers to build application-specific blockchains only if they could manage their validators. The problem is, developing a validator set from scratch is not a piece of cake – it is time and resource intensive.
This is where Interchain Security comes into the picture. With this feature, developers can now build new application-specific blockchains and secure them using the same security validators that run Cosmos Hub.
Furthermore, these blockchains will send fees to those security validators, further incentivising ATOM stakers – this is a crucial point to note.
Essentially, this feature enables Cosmos to emulate the design of Polkadot (DOT). On Polkadot, each application-specific blockchain, by default, shares its validator security with the central relay chain. Initially, this feature was set to be rolled out in August/September 2022, but was delayed. At the time, Cosmos contributors stated:
“Interchain Security will emerge as the premier method for projects to get the highest level of security in Cosmos by leveraging the entire 175+ Cosmos Hub validator set.”
Ideally, the rollout of this feature will see increased developer activity on the blockchain ecosystem and further adoption of the crypto asset, with increased staking rewards on the horizon. Overall, this feature is expected to make the blockchain ecosystem simpler to use, cheaper, and quicker.
Cosmos as an ecosystem is a game-changer
Thanks to the IBC, Cosmos has become the Interchain. As a high-speed interoperability platform, Cosmos has gained significant traction (pretty obvious from the wild price statistics in 2022!). One of the pressing issues affecting the crypto space is a lack of composability between blockchains in different ecosystems.
The blockchain ecosystem solves this problem and serves as a viable alternative to slow, unscalable, expensive, and environment-damaging PoW protocols. IBC makes it easier for the blockchain sphere to communicate seamlessly, thereby attempting to eliminate fragmentation between different blockchain ecosystems – the ultimate goal. To put this into perspective, Cosmos allows interoperability with Bitcoin and Ethereum via bridges. A bridge to Polygon is awaited and, too, may play a major role in ATOM’s price rise.
Several popular blockchains, including Binance Chain (BNB) and Crypto.com Coin (CRO), are built using the Cosmos software development kit (SDK). We may see numerous new players building on Cosmos very soon.
The rollout of the Interchain Security feature was expected to see ATOM's new tokenomics structure come into play, with a transitory phase of 36 months. The ATOM 2.0 proposal, though, was rejected by the community on 15 November, 2022.
With an infinite token supply, the cryptocurrency's tokenomics structure is based on inflationary dynamics. To put this into perspective, there were 214M tokens in circulation in March 2019, compared to the ~300M tokens in circulation today – an increase of nearly 40%. The new tokenomics structure proposed the issuance of 10M ATOM tokens per month, with the issuance rate steadily decreasing to 300,000 tokens per month, thereby bringing down the cryptocurrency's inflation rate to 0.1%.
You must factor in the tokenomics of ATOM when making a price prediction. The supply of the cryptocurrency will keep increasing exponentially.
ATOM price prediction: verdict
All said and done, there is no roof to the potential ATOM has. Having highlighted each of the factors that may play a role in the crypto asset’s price rise in 2023, it is fair to say that ATOM is a good long-term investment option.
Cosmos solves one of the most pressing issues affecting the crypto sphere – a lack of interoperability and composability. Cosmos and Polkadot are among the few players who have set out to solve this problem and are doing a great job as we speak. The rollout of the Interchain Security feature is a game-changer for the ecosystem, as it will bring about several changes.
The market situation has not been the greatest of late, so make sure you invest wisely. On a concluding note, keep an eye on the latest Cosmos news and DYOR at all times!
Author: Surajdeep Singh
Surajdeep Singh has been working in the tech sphere as a marketing guru and journalist for over 6 years, with his speciality laying in blockchain and Web3. He has donned several hats in marketing and journalism over the years and worked with many reputable brands. Feel free to reach out to him on LinkedIn!