Weekly Digest: Chung’s Picks of the Week (12/12)

L2 solutions will be the main drivers behind Ethereum’s incoming pump as another rally is still in play

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Bitcoin’s Lengthening Cycle Theory

The market continues to dip further as a confluence of bearish news hits the market. Evergrande Group failed to make $82.5 million of interest payments due and was downgraded to “restricted default.” The Omicron variant led to fears of further economic shutdown, and increasing Federal Reserve tapering will result in liquidity pull back. 

In previous market cycles, Bitcoin price peaked in December 2017 before taking a massive tumble. If the same is true this cycle, the crypto market may have seen Bitcoin peak at $69,000 on November 10. 

One of the strongest indicators that the bull cycle is still alive is the 200-day moving average. So far, the trend has not been broken. But it has been tested on several occasions. 

In 2017, the bull cycle lasted 35% longer than the 2013 bull cycle. If this assumption is true, then this current cycle might end in Q1 of 2022. Unlike previous cycles, crypto assets are maturing and gaining institutional adoption. Volatility has also significantly reduced. 

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Weekly Recap

Bitmart was hit by a large-scale security breach, leading to losses of approximately $200 million.  

Landshares completed first tokenized real-estate sales on the Binance Smart Chain 

Celsius Chief Financial Officer (CFO) arrested for fraud.

Chainlink Keepers go live on the Binance Smart Chain 

The US Securities and Exchange Commission’s (SEC) Chief called for stricter regulations. 

Crypto leaders got a rare chance to address the US Congress in a House Committee hearing. 

Shopping.io became the first shopping center within the metaverse. 

The French and Swiss Central Banks prepared for their own Central Bank Digital Currency (CBDC) called ‘Project Jura.’

Ethereum breaches its all-time high hash rate of 909,842.38.

Brazil went forward with a law to regulate Bitcoin. 

Reddit moved towards a decentralized token system to give ownership, control, and independence to its community. 

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Market Sentiment

MicroStrategy said it purchased approximately 1,434 bitcoins for $82.4 million in cash between November 29 and December 8. It now has a total holding of 122,478 bitcoins.

Re-elected Miami mayor Francis Suarez agrees to take 401k retirement savings partly in Bitcoin.

The market sentiment amongst long-term holders and institutions remains bullish as Bitcoin continues to be swallowed up. 

Bitcoins are changing hands from retail investors that are shaken out from the market.

Other altcoins are also seeing massive losses as investors are seeking safer investments in Bitcoin and Ethereum.

Memecoins are losing momentum and have dropped out from the top-10 crypto assets by market capitalization. This is a healthy development.

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Coins to Watch

The ETH/BTC pairing on the weekly chart is showing a bullish ‘cup and handle’ pattern forming. 

Market’s recovery will likely be led by Bitcoin ($BTC). If Ethereum ($ETH) smashes through its previous all-time high ($4,878) and gains dominance against Bitcoin, this may lead to another Alt-Season. Other altcoins may start staging rallies of their own.  

Cardano ($ADA) is expected to roll out its own Decentralized Exchange (DEX) in mid-December and will likely see some renewed interest. 

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Coins to watch out for will be coins with a large ecosystem, a thriving community, and its value proposition. These coins are a good long term investment at their current rate:

Solana ($SOL)

Avalanche ($AVAX)

Cosmos ($ATOM)

Terra ($LUNA)

Binance Coin ($BNB)

PancakeSwap ($CAKE)

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Layer-2 Solutions Is the Next Major Narrative

The biggest drawback for Ethereum ($ETH) is scalability, speed and costs. Ethereum has the first mover advantage and many projects are built on the Ethereum network. 

Many assets on the blockchain are priced in ether. 

Ethereum’s inability to scale and making Decentralized Finance (DeFi) inaccessible to the smaller investors by its high gas fees, defeats the idea behind empowering the unbanked or underbanked. 

Boba Network, a layer-2 solution on the Optimistic Rollup hit $1 billion to Total Value Locked (TVL).

‍“A “zero knowledge proof” approach is used to present and publicly record the validity of the block on the Ethereum blockchain. ZK reduces computing and storage resources for validating the block by reducing the amount of data held in a transaction; zero knowledge of the entire data is needed” – Ethereum’s roadmap features ZK Rollups as its solution to deal with scalability and fees. 

Ethereum is unlikely to be ‘dethroned’ anytime soon and will likely lead the crypto market in 2022. This is also because it usurped Bitcoin’s narrative as a ‘store of value.’ 

The next big gains will probably be in layer-2 solutions.  

Come back next week for another iteration of Weekly Digest: Chung’s Picks of the Week from BSC News. Be sure to follow Chung on Twitter.

Don’t forget to download the BSC News mobile application on iOS and Android to keep up with all the latest news for Binance Smart Chain and crypto! Be sure to join the DeFi Direct Discord to participate in all the community discussions and events!

Source : bsc.news