ATOM drops 20% last week: is downtrend set to continue?

The cryptocurrency market is bearish as investors reel from the effects of the ongoing conflict in the Middle East.

Cosmos Hub (ATOM) has declined below the $1.80 level at the time of writing on Monday, down 1% in the last 24 hours.

The coin lost 20% of its value last week thanks to weakening on-chain and derivatives data.

Retail interest in ATOM remains poor, with the technical analysis still unfavorable.

Furthermore, risk-off sentiment persists, as the escalating military aggression in the Middle East over the weekend foils recovery attempts in the broader crypto market.

On-chain and derivatives data paint a bearish picture

ATOM has underperformed in recent days as retail interest in the coin declines.

According to DeFiLlama, the Cosmos Hub’s Total Value Locked (TVL) has declined to $138,370.

The TVL has been steadily declining since mid-January. The declining TVL indicates weakening activity and waning user engagement in ATOM’s ecosystem.

This suggests that fewer participants are depositing or interacting with ATOM-based protocols, a metric that could further affect ATOM’s price.

Derivatives data for Cosmos Hub are also poor, with the hopes of a recovery looking faint.

CoinGlass’s OI-Weighted Funding Rate data for ATOM reveals that the number of traders betting that the price of ATOM will slide further is higher than those anticipating a price increase.

The OI-Weighted Funding Rate flipped negative last week and currently reads -0.127%, indicating that short traders are paying longs.

Bears could push ATOM’s price below $1.65

The ATOM/USD 4-hour chart on Kraken is extremely bearish, thanks to the 20% decline recorded last week.

Currently, ATOM is trading below the $1.90 support-turned-resistance level.

If the bearish trend persists, ATOM will likely retest the February 6 low of $1.65 over the next few hours or days.

Momentum remains weak, with the Relative Strength Index (RSI) on the 4-hour chart at 36, indicating subdued buying interest.

The Moving Average Convergence Divergence (MACD) is declining below its signal line and the zero mark, suggesting persistent downside pressure.

ATOM is facing immediate resistance at $1.83. If the daily candle closes above this resistance, the $1.90 level will become the next target for the bulls.

The weekly resistance levels at $2.05 and $2.12 remain far targets for ATOM in the near term.

If the bears retest the $1.65 support level, ATOM could experience a bounce as it is a zone where previous demand emerged.

However, a break below this support will expose lower levels. Meanwhile, only a sustained move back above $2.05 would start to neutralize the current bearish tone.

The market conditions will likely remain volatile as the ongoing conflict between the United States and Iran escalates.

ATOM and the broader market will rally higher if an agreement is reached between the parties soon.