Why did Kusama (KSM) drop from $600 to less than $25, and what is the secret of its recovery now?
Kusama (KSM) has been one of the most volatile cryptocurrencies in recent years, dropping from around $600 to less than $25. But now it’s gradually rebounding. So what happened? Why the recent upswing?
Reasons for the big drop in Kusama coin
1. General market decline
The entire cryptocurrency market has been experiencing sharp volatility since 2021 due to interest rate hikes by central banks and a decline in risk appetite among investors. Small coins like KSM have been the most affected.
2. Its experimental role
Kusama is the testnet of Polkadot (an innovative blockchain system that allows connecting different blockchains to easily transfer data and develop decentralized applications), where projects and applications are tested before being launched on the mainnet. This role made it heavily dependent on the success of Polkadot, and with the decline in demand for projects related to Parachains, the currency gradually lost its value.
3. Low network usage
As market interest in Kusama parachain auctions waned, demand for holding the coin for long periods decreased, negatively impacting its value.
What is the secret behind Kusama's return to the top?
1. General market improvement
With the crypto market recovering in 2024 and the demand for coins linked to strong tech projects increasing, investors are starting to return to KSM.
2. Parachute Auctions Activity
The return of activity to parachain auctions on Kusama and the increased demand for network usage has restored momentum to the coin.
3. Updates and new projects
The renewed launch of some updates and projects on the Kusama network has made investors look at it as a good opportunity to invest again.
Is the rise sustainable?
Kusama’s recovery reflects an overall improvement in the market, but it depends on continued demand for parachain projects and Polkadot developments (one of the most prominent tech projects that seeks to connect all blockchain networks together). If you are thinking of investing, be sure to follow the news and developments.
Ultimately, Kusama’s success depends on its exploitation in the Polkadot ecosystem. It still has a long way to go to regain its former status.
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