Crypto traders remain bullish on Celestia (TIA) even after 480% rally — Here’s why

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Modular blockchain Celestia has posted amazing growth since its launch on Oct. 31, 2023, when TIA tokens were airdropped to 580,000 users and the mainnet went live. Since launching, TIA has risen more than 460% from its debut price of $2.10 to the current value of $13.

The altcoin had a slow start in terms of on-chain activity, initially facilitating only 510,000 transactions in the first two days, according to data from MintScan.

However, as traders’ appetite grew, TIA price followed and ultimately, on-chain activity grew as well. MintScan data shows that the network has so far facilitated 6,649,287 transactions since its debut on Oct. 31, 2023.

Celestia Blockchain Transactions Summary. Source: MintScan

By comparison, rival blockchain Cosmos has averaged between 2.3 million transactions over the past 30 days against Celestia’s 5.9 million, MintScan data shows.

Celestia’s activity grew 85% within just two weeks, according to data from Santiment. Despite the decrease in social volume and development activity over the last few weeks, these metrics have started picking up in 2024 according to data from Santiment, an on-chain analytics firm.

Celestia’s development activity and social volume. Source: Santiment

TIA’s price grew in tandem with the on-chain activity. As the users interacted with the blockchain, demand for TIA grew resulting in price growth. The demand for TIA also grew from the need to earn big staking incentives in the Cosmos Ecosystem and Osmosis. In addition, staking TIA comes with the hope that projects integrated with Celestia will issue token airdrops, similar to how Solana’s Jito and Marinade DeFi protocols rewarded users with tokens in December 2023.

TIA price was $13 on Jan. 3, after a 42% gain made in 30 days and an impressive 481% increase in value over the previous 90-day period.

Its market cap skyrocketed in just 15 days, from a near non-existent to a remarkable $885 million on Nov.15, 2023. TIA’s market capitalization currently stands at $1.9 billion, according to data from CoinMarketCap.

Celestia’s market capitalization Source: CoinMarketCap

The growth of TIA’s value is believed to coincide with the launch of Celestia’s mainnet beta on Oct. 31, 2023, marking the beginning of the modular blockchain era.

Celestia’s “data availability” offers a scalable solution

Celestia differentiates itself from its competitors as a modular data availability network designed to enhance blockchain scalability and improve the developer experience. Its design allows it to provide a scalable data availability layer for other blockchains, also known as “rollups.”

By separating the application and consensus layers, Celestia allows these rollups to execute transactions independently while ensuring that the data of these transactions is available and can be validated by anyone.

This feature ensures easy creation of specialized, improved flexibility, and efficient blockchains, promoting a more dynamic decentralized ecosystem.

This concept is somewhat similar to how Zero-Knowledge proofs function in Ethereum, where users are required to download just 1-2% of the entire chain to validate it. Celestia executes this through light nodes that download a minimal portion of the chain.

How Celestia’s data availability method works. Source: Celestia Whitepaper

One metric that is used to assess the scalability of blockchains is transactions per second (TPS). Celestia is currently totaling 14 TPS. Meanwhile, Arbitrum has a daily average of 13.31 TPS, according to L2Beat.

This is a notable performance given that Celestia only rolled out less than 4-months ago and the network’s adoption is yet to match that of Arbitrum, which has been operational since May 2021.

Arbitrum faces stiff competition from industry giants like NEAR, which has joined Celestia in the race to provide data availability services to Ethereum rollups.

While Celestia’s data availability scaling layer is likely to find a niche of users, it remains to be seen how the price will react as the ecosystem grows.

Related: Celestia to integrate with Polygon CDK for data availability in 2024

TIA price trades within a key demand zone

TIA dropped alongside the top-ranking cryptocurrencies as the market participants await for the United States Securities and Exchange Commission’s (SEC) decision on spot Bitcoin ETF applications.

Apart from the bearish sentiment witnessed across the board on Jan.3, the sell-off in the price of TIA could be due to profit-taking on the latest run up to $14. The token has recorded a series of lower highs and lower lows over the last three days, leading to the appearance of a descending parallel channel on the four-hour chart (see below).

This is a significantly bearish chart pattern that points to continued drop as long as the price remains within the confines of the declining channel.

The relative strength index (RSI) has dropped below the 50-point mark suggesting that the bulls have begun losing market dominance to bears. Key levels to watch on the downside are the 100-period exponential moving average (EMA) at $12.38 and the major support level at $11.18.

TIA/USD 4-hour chart. Source: TradingView

On the upside, the Celestia price traded in a significant demand zone between $11.18 to $12.91. Note that this support zone has provided a launching pad for TIA in the recent past as shown on the -hour chart above.

The first time was on Dec. 14, 2023, when the crypto went on to rally $25% setting a swing high at $14.76. The next time was on Dec. 20, 2023, and Dec. 23, 2023, with the price soaring 16% and 29% respectively from the same demand zone.

If the same scenario plays out, Celestia buyers from this demand zone could push the price 22% from the current levels with their eyes set on the $15 or $20 psychological levels.