Baar Switzerland – It appears that global financial markets are in a wait-and-hope phase of the cycle. These unprecedented times relating to high debt-to-GDP numbers, slowing GDP growth in a rising interest rate environment is resulting in a highly volatile market. The impacts of the recent rate hikes to effect a slowing of inflation remains a question mark and we are likely to only see these effects filter through in the last quarter of 2022.
Throw into that mix: political uncertainty in the West and warring on eastern European borders with one of the major global resource producers on the planet and you make the lives of economic and monetary decision-makers a nightmare.
Let us rather focus on what we do know. We know that the Crypto market is being brought into the realm of global financial markets as a significant player. Recently Bitcoin has been building a higher and higher correlation to global financial markets such as the Nasdaq to levels it has never shown in its history. Does this signify the early stages of mass adoption? How can a completely nascent asset class be trading in line with such behemoths of the traditional financial system if this was not the case?
Capital flows into the Metaverse and Crypto ecosystems are accelerating to record levels
Secondly, we know that development in the blockchain and decentralised ecosystems have not slowed by any means. The Ethereum Merge happening in the coming months has developers working around the clock in preparation for the event. Tickets to the Ethereum Consensus Convention to be held in Paris later this month have been sold out within seconds of going live on 3 separate release dates. And it does not stop there, as we pointed out in 2 previous additions the capital flows into the Metaverse and Crypto ecosystems are accelerating to record levels. Yesterday, Binance Labs announced it raised $500m to fund Web 3.0 and Blockchain investments.
Thirdly, we know that more and more governments are seeking ways to adopt the use of crypto in some way, shape or form, whether it be via establishing regulatory reform, using the technology to establish inter-country payment systems, creating Central Bank Digital Currencies or just plain straight adopting Bitcoin as legal tender. Change is upon us.
Fourthly, we know that during crypto bear markets, developers and investors that are in the blockchain space to create and build rise to the top like cream and those that are only in it for the financial gains slip away quietly. Only the versatile and quick-to-respond will survive, and for those that do, the rewards are great.
Fifthly, we know that Bitcoin is down almost -60% from its highs while alt coins are down -60-80%. We know that we have seen this before and that the technology and adoption has only improved since previous bear market cycles.
Therefore, while the bottom of the market may not yet be in for 2022 given all the uncertainty surrounding economic growth, interest rates and political instability, we know that humans are highly resilient by nature and always adapt with new technology to improve on the old. The question is does crypto form a greater part of that new resilient technology in the future? And if so, the rewards will be great for those that continue to build.
Bitcoin Technical Outlook
While it is highly probable the market bottom is in ($25.3k) in the short term (next 3-4 months) we are in for a bumpy ride higher. The market continues to show strong support at the $28k level but will need to break above $33k to open up the $39.5k level once more. Therefore, we suspect the market will bounce between the $30-42.5k price region over the next 3-4 months with a POSITIVE bias meaning more buyers than sellers over the period. In the short term, all eyes are on the $28k and $33k levels support and resistance levels, respectively. (SwissOne Capital/mc/ps)
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