It’s been a challenging time recently in the futures market, with ATOM being rejected at $11.5 and bulls rekt. Today, we’ll be taking a deep dive into the market’s reaction to ATOM’s contentious decision and the impact that this move has had on the futures market.We will also examine whether it could be a portent for more losses to come in the near future.
1. ATOM Plummets in Futures Market as Bulls Wipe Out
ATOM has suffered a turbulent drop in the futures market, as bullish investors hastened to liquidate their positions. The majority of investors were selling off their ATOM holdings, causing the price to spiral downwards in a bearish race. In a matter of hours, the value of ATOM dropped by nearly 10%, leaving many investors scratching their heads and wondering what the trigger could be.
The past few weeks have seen ATOM rallying to new peaks, with many investors hopeful that the coin was en route to an all-time high. That hope was quickly wiped out, as the bearish wave sent the price tumbling down with great speed. Analysts have identified several potential reasons for the sudden market retreat:
- The sell-off of large investors: According to reports, several large investors had sold off a substantial amount of their holdings in the past few days.
- Profit-taking: A number of investors had profited from the surge in prices and were looking to cash out before the prices dropped further.
- The crypto market crash: The retraction in prices was part of a global crypto market crash, as Bitcoin and other coins also saw significant drops.
Post-crash, the ATOM price is currently trading around $0.20, nowhere near its previous peaks. Analysts are still unsure as to whether this price point is a good entry point for long-term investments or not, as the markets remain highly uncertain in the short-term.
2. Recent Bearish Trends Put Investors On Edge
2020 has been a volatile year for the stock markets, with the continued spread of the COVID-19 pandemic repeatedly pushing markets into a tail-spin, before the rally would buoy them back up again. Now, investors are finding themselves in the midst of another potential downturn, as bearish trends continue to spell trouble.
1. Uncertainty Abounds Together With Economic Weakness
- U.S.-China relations remain fraught, as each accuses the other of pandemic-related lying,
- The global pandemic is still raging, leaving the full economic recovery in a state of limbo,
- High unemployment and an uncertain job market,
- The Federal Reserve’s stimulus package is not expected to last forever.
The U.S. Indices, S&P500, DOW, and NASDAQ all demonstrated a volatile state in the past week, with Trump Administration’s threats of new tariffs being met with counter-threats from China. As such, a lapse in trade negotiations and tensions between the two countries has investors increasingly concerned that stock markets may cool off towards the end of the year.
2. Bond Yields Show Promise of Economic Weakness
The U.S. Treasury Bond Yield Curve has continued to flatten, indicating that traders have lost confidence in the economy. The curves show that investors have moved away from riskier investments and into safe-haven assets. This hesitation indicates that while some of the markets may have peaked, they remain concerned about the potential of an upcoming recession.
3. Concern For Non-Tech Companies
When it comes to tech stocks, there is an expectation that they will continue to climb, as long as economic measures, such as stimulus packages and the Fed’s rate cuts, continue. But for non-tech companies and small businesses, a downturn could present problems. As such, investors are expecting a slowdown in the markets, putting a strain on the entire economy.
4. What Can We Expect?
Since the damage from the pandemic continues to spread, investors remain on edge. Many fear that this fall could bring yet another economic crash. As, such, it is important for investors to remain cautious, and to remember that long-term investments are often more secure than short-term strategies. Among all the chaos and uncertainty, understanding risk, diversifying, and exercising patience may be the best strategies to weather bear markets.
3. What Caused the Selloff in ATOM Futures?
The recent selloff in ATOM futures caught many investors off-guard, leaving many with questions about the cause. While it’s impossible to pinpoint the single factor driving the market, several likely culprits stand out.
Over-expectation of Instant On-chain Use
ATOM’s associated crypto asset of the same name rallied hard in the months leading up to the much-anticipated March 8 launch of the Interchain protocol. Investors were expecting immediate, sustained on-chain activity, only to be disappointed by lackluster transaction speeds once the protocol was released. This sentiment was readily expressed in the resulting market selloff.
- A significant influx of hot money
- Heightened competition in the DeFi space
- Regulatory uncertainty
A Significant Influx of Hot Money
Observers have argued that such a rapid and violent selloff was fueled in part by speculation around the market potential for ATOM. As the asset gained widespread attention, so-called “hot money” poured into the asset and likely drove prices up far faster than the underlying fundamentals could sustain.
Heightened Competition in the DeFi Space
The DeFi space has become increasingly competitive in recent months and ATOM is playing catch-up to more established assets, like Ethereum, Ripple, and various iterations of Bitcoin. This could have put pressure on the ATOM asset and led to the selloff.
Regulatory Uncertainty
The ongoing regulatory uncertainty surrounding the cryptocurrency space could have also complicate investors’ feelings on the ATOM asset. While the asset launch was clean and relatively uneventful, the mood around crypto regulation has arguably soured, leading some investors to be more cautious when it comes to jumping into unproven assets.
4. How to Play ATOM in Volatile Futures Market
Atom, an Ethereum-based decentralized finance (DeFi) protocol, can be a great tool for playing in the volatile futures markets. Here are four tips to help you make the most of this DeFi platform.
1. Understand the Leverage Effects
Atom is all about leverage. You can essentially get exposure to derivative products with a much smaller amount of money, amplifying both profits and losses. Before you start trading with Atom, it’s important to understand the risks that come with margin trading. Always make sure you know everything about the assets you’re investing in and the risks involved.
2. Set Stop-Loss and Take-Profit Orders
Stop-loss and take-profit orders are essential tools if you’re playing in the futures market. Stop-loss orders will trigger a sale when the price of an asset falls to a certain level, protecting you from further losses. Take-profit orders, on the other hand, will make sure you lock in a certain amount of profit if the price of the asset rises to a certain level. It’s important to set these orders before making a trade in order to take emotion out of the equation.
3. Monitor the Market Continually
Atom is all about taking advantage of short-term market swings. That’s why it’s so important to stay up to date with the market. Set up alerts for important news, prices, and trends and don’t forget to monitor the daily economic calendar.
4. Don’t Get Greedy
It’s easy to get carried away when you start making money in the futures market. It’s important to remember that volatility can be your friend and your enemy. Once you’ve hit your pre-set goals, or if the market turns against you, it’s best to cut your losses and get out of the market.
5. Is ATOM a Good Investment or Too Risky?
When it comes to investing in ATOM, it can be a risky proposition. Its volatility can be high, and the losses can be significant. However, there are reasons to consider investing in ATOM, based on past performance and potential future trends.
Past Performance: Overall, ATOM has seen a positive trend over the past few years. It is up 23 percent in the last 12 months and 11 percent in the past month. It has also been the top-performing cryptocurrency over the past three years, outperforming other well-known coins like Bitcoin and Ethereum.
High Volatility: Despite its strong performance, ATOM can be a highly volatile asset. Price swings can occur quickly, making it difficult to make predictions or strategies. That said, volatility can also be an opportunity for traders to capitalize on market movements and make profits.
Future Potential: While ATOM is still in its infancy, there is speculation that its potential could be vast. Many experts have concluded that ATOM could have a major impact in the future of blockchain-based digital assets. Adoption is growing rapidly, and the number of developers working on ATOM-related projects is on the rise.
In short, investing in ATOM comes with risks and rewards. It is advisable for investors to research the project thoroughly and weigh the pros and cons before deciding if it is a good choice for them. Here are a few things to consider:
- Research the project and its team
- Analyze the markets and trends
- Understand the risks associated with ATOM
- Develop a trading strategy
The verdict is still out on ATOM’s performance in the futures market, with many bullish investors disappointed with the recent rejection at $11.5. All eyes will be on the coin to see how it fares moving forward, as the volatile crypto markets continue to heat up.