Weekly Digest Chung’s Picks of the Week

Bitcoin ranging between $46k to $49k as the biggest crypto asset struggles to find its direction

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Inflation is the Problem, Bitcoin is the Solution

Bitcoin continues to keep the market guessing with its range bound price action. The crypto market is far from being overheated and market sentiment is weak. 

Jerome Powell found the courage to declare that crypto will not undermine the financial stability of the US economy. This brought about some optimism to the crypto market. But inflation and tapering will continue to haunt the market in 2022. 

Inflation is a real concern to the crypto market compared to the news on China banning Bitcoin for the umpteenth time. The Federal Reserve announced on Wednesday that it will be removing monetary support for the economy. Interest rates will be hiked three times in 2022. Rising interest rates will remove liquidity from the equities market. https://cdn.embedly.com/widgets/media.html?type=text%2Fhtml&key=96f1f04c5f4143bcb0f2e68c87d65feb&schema=twitter&url=https%3A//twitter.com/i/status/1469732718028201996&image=https%3A//abs.twimg.com/errors/logo46x38.png

Bitcoin is gaining more prominence as the ‘ultimate store of value’. Gold has held this title for centuries and as a result, it sits at $11.424 trillion in terms of market capitalization. On most metrics, Bitcoin is a superior alternative. Therefore, the natural progression will be a progressive transfer of value from gold to its successor, Bitcoin. 

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Weekly Recap

Binance ditches its plan to obtain a Singapore license and winds down Binance.sg’s operation. 

Bloomberg Intelligence predicts that the US will embrace crypto regulation in 2022 and this will bring about bullish price implications.  

Polygon acquires Mir Protocol to focus on zero-knowledge cryptography, a scaling solution for the Ethereum network on layer-2.  

Thetan Arena continues to keep the GameFi narrative alive by surpassing 6 million players. 

Binance announces ‘Project Shield’ aimed at decreasing risk of exploits. 

The US Senate hears testimonies from industry representatives and banking lawyers on stablecoins.

Metamask opens its doors to almost all hardware wallet integration to its open QR code standard. 

UK’s advertising watchdog tightens enforcement on crypto advertisement. 

SEC’s Commissioners are disappointed in Gensler’s regulatory agenda for not protecting investors by providing the much needed clarity on digital assets.

Axie Infinity mobilizes relief operations in the Philippines after being ravaged by Typhoon Odette.  

Market Sentiment

Reality kicks in for many investors that the elusive $100k per Bitcoin may not be attainable in 2021. 

Bitcoin ($BTC) and Ethereum ($ETH) may not see parabolic price action like in the previous market cycles as these assets start to gain mainstream acceptance. 

Bitcoin price has been suppressed despite bullish on-chain data and some observers are expecting a minor year-end rally.  

Unprecedented amount of selling from Asia but this selling pressure is reducing. 

The US and the European market is buying as the market dumps. 

The market will turn bullish if Bitcoin price breaks above $53k and stays above $53k with good volume. 

Web 3.0 narrative is growing and projects building on this narrative with good value propositions will get the financial backing they need from Venture Capitalists (VCs).

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Coins to Watch

Ethereum will likely outperform Bitcoin in the mid to long term period. 

If Ethereum resolves its problem with scalability, through the various rollups, Ethereum will see its price breaching its previous all-time high. 

Centralized stablecoins will continue to be hounded by regulatory concerns. $USDT, $USDC and $BUSD, the top three most used stablecoin will lose their market share to $UST, an algorithmic stablecoin.  

Terra ($LUNA) stands to gain if $UST gains prominence. $UST is collateralized by Terra’s native asset, $LUNA.  

$UST is built on the Terra blockchain. 

Good long-term investments can be divided into a few categories

Base Protocols

Ethereum ($ETH)

Solana ($SOL)

Avalanche ($AVAX)

Terra ($LUNA)

GameFi

Thetan Arena ($THG)

Gala ($GALA)

Axie Infinity ($AXS)

DeFi

– Scallop ($SCLP)

Metaverse

– Render Token ($RNDR)

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IOTA’s Staging Network

Shimmer Network will be IOTA’s staking network just like Kusama ($KSM) or Songbird ($SGB). Stake IOTA for $SMR tokens as a staking reward. The $SMR tokens will be fairly distributed and will likely hold its value. 

  

Price is a Poor Indicator

Price is a fool’s indicator. Price does not reflect a project’s potential. 

Price is often reactive. For mid to long term investment, the best indicator is the money flow. 

‘Smart money’ will source for projects that have good value propositions that fit into the current market narratives. 

The narratives that are playing out now are Metaverse themed projects, Decentralized Finance (DeFi) and Web 3.0. 

The 4-year market cycle theory might no longer be applicable if crypto assets gain mainstream appeal.

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.

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Source : bsc.news