Investors expect fresh capital inflow will be unlocked in Q1 2022 and will kickstart the second leg of the bull-cycle.
Institutional Liquidity
This week, Bitcoin staged a relief rally and broke past the psychological barrier of $50k but struggled to stay above $51k while funding rates are on the rise again.
Bitcoin’s direction will determine if we will see another altcoin season within this market cycle. Both Bitcoin ($BTC) and Ethereum ($ETH) are trading rangebound. Q1 of 2022 will be an interesting year for crypto assets for a few reasons:
Institutional liquidity will be unlocked in Q1. Capital inflow allocated for digital assets will provide positive price action.
Regulation is supposedly around the corner to provide much-needed clarity and certainty to the market.
The US Securities and Exchange Commission (SEC) will likely approve spot Exchange Traded Fund (ETF) for Bitcoin and Ethereum.
Inflation will send institutions to seek a safer haven by hedging their reserve. Crypto assets will be one of the beneficiaries.
One of the major stumbling blocks to crypto regulation appears to come from the SEC. Coinbase’s proposal of having a newly established regulatory body for crypto assets might work.
Weekly Recap
FTX US inks major sports partnership with Monumental Sports & Entertainment (MSE).
Axie Infinity ($AXS) proves that the community can band together to raise more than $450k for typhoon relief operations in the Phillippines.
Ethereum inches closer with its Proof of Stake (PoS) public testnet launch.
Visa moves to integrate with 60 crypto platforms. Cryptos are gaining recognition as a medium of exchange.
Terra ($LUNA) surges towards being the second biggest Decentralized Finance (DeFi) blockchain measured by the Total Value Locked (TVL).
Former President, Donald Trump is still critical of cryptocurrencies.
Binance’s Chief Executive Officer (CEO welcomes Central Bank Digital Currencies (CBDC).
Binance looks at Dubai to establish an industry hub.
Texas moves to become a major Bitcoin mining and data center with a $2.4 billion deal.
Binance Dubai aims for a global regulatory framework for digital assets.
Market Sentiment
Christmas and New Year holidays are here. There will be less market activities.
The absence of institutional traders also means that the market will be illiquid and some volatility can be expected.
Price action in this coming week will be largely influenced by retail buyers.
Long-term hodlers are not parting with their Bitcoins.
On-chain analyst Will Clemente believes that if Bitcoin reclaims $53k, the market will flip bullish.
The market recovers from the Omicron scare but will remain jittery on any news of major outbreaks.
Venture Capitalists are targeting projects that build on Web 3.0 and Metaverse themes.
Coins to Watch
2022 will likely see Ethreum ($ETH) breaking new highs. Most projects are built on the Ethereum network and will probably drive adoption in 2022 once scaling, and gas fees are resolved.
Ethereum will be the best risk-adjusted returns investment.
Terra ($LUNA) has been hogging the limelight as it breaks the $100 psychological barrier and will likely see a new all-time high this coming week.
Cardano’s ($ADA) wallet has grown by 1,200% in 2021.
Algorithmic stablecoins such as the $UST will gain more prominence in 2022.
Polygon ($MATIC) appears to mimic the price movement of Ethereum in 2017.
Good long term hold will be $ETH, $MATIC, $LUNA, $SAND, $XRP and $ADA.
$MATIC and $LUNA will get interesting because when they break all-time highs, they will go into price discovery. Price movement can get parabolic at the price discovery stage.
$XRP is a good risk-reward investment. The price has been long suppressed by the ongoing litigation with the SEC and will likely be concluded in the first half of 2022. $XRP has real utility and is widely used.
$ADA has long been criticized as an overvalued project. But surprisingly, it has a huge community that believes the platform will change the game.
DAOs that Promises High APYs
Yield farmers are often attracted by projects promising high yields.
Olympus DAO ($OHM) started the trend and created many forks.
Some forks fare better than others. Wonderland ($TIME) is one of the better-performing forks.
Jade Protocol ($JADE) is one example of the inherent risk with such protocols.
The promise of a high Annualized Percentage Yield (APY) often comes with massive inflation that will drive down the price of the asset.
The airdrops for stakers that did not redeem their $JADE did little to help the plummeting price.
Source : bsc.news
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