Here’s why Osmosis (OSMO) hit a new all-time high

Crypto assets have been operating within the Cosmos ecosystem since the beginning of 2022, thanks to a heavy focus on brokering cross-chain compatibility with other blockchains. One of the decentralized finance (DeFi) protocols that has benefited from existing expansion plans is Osmosis (OSMO).

Osmosis is the first Decentralized Exchange Service (DEX) project connected through the Interblockchain (IBC) communication protocol and data from Cointelegraph Markets Pro shows the price of OSMO has risen 123% from a low of $4.05 on Dec 17 to a new all-time high of $9.24 On January 7th.

OSMO/USD 1 day chart. Source: CoinGecko

Three reasons for the price growth seen in OSMO include the rise in trading volume in DEX, a record total value locked to the protocol and the launch of cross-chain bridges connecting the Cosmos (ATOM) ecosystem with Ethereum (ETH) virtual machine (EVM) compatible networks .

High trading volume

One of the biggest factors that helped drive the price of OSMO was the significant increase in trading volume on the exchange. According to data from Token Terminal, trading volume reached a record high of $186.8 million on January 7, and a new all-time high was reached on the same day.

OSMO price vs DEX trading volume. source code station

The surge in trading volume and the price of the token briefly led to Osmosis becoming the third-ranked DEX by market capitalization as shown in the following tweet from Twitter user Jimmy Yang.

Another factor that has helped boost OSMO’s price with increased trading volume is the fact that more than 81 million OSMOs are currently connected to the network, according to data from SmartStake. Moreover, a large part of the supply is also used to provide liquidity in the various liquidity pools offered on osmosis.

Total value locked in height

The second development defining the bullish case for OSMO has been the steady increase in the total value locked to the protocol, which reached $1.21 billion on January 11, according to data from Devi Lama.

Total locked value on osmosis. Source: Devi Lama

TVL Climber comes in a variety of styles Tokens in the Cosmos ecosystem have reached new heights. Notably, ATOM, the most valuable asset of Cosmos, reached a daily high of $43.64 on January 7, which is $1 below its all-time high. The second original osmosis coin, ION, also reached a new high of $16,500 on January 11.

Related: 3 reasons why Cosmos (ATOM) price is approaching a new all-time high

Across the chain lightens the burden on traders

The third reason for the upward bias in OSMO is the increased interest that Cosmos has directed towards EVM compatibility and cross-chain bridging.

Evmos is an existing project in development that is working to become the first IBC-compliant EVM-based chain and currently supports ERC-20 tokens on its testnet.

Injective, the L1 protocol, has been revealed to be developing cross-thread bridges for Cosmos-based projects and is currently working on OSMO support.

As cross-chain bridges come online and allow tokens from other EVM-compatible networks to access the Cosmos Hub, Osmosis has the potential to see more volume increases and TVL just because it is the main DEX of the Cosmos ecosystem at this time. If this happens, there is also the possibility that the price of OSMO will rise even more.

The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risks, you should do your own research when making a decision.