Crypto Weekly: 17 – 23 January 2022
According to data revealed last Wednesday, US Inflation is at a 40-year high. CPI rose by 0.5% in December alone, pushing inflation rates to 7%. The spike in inflation was anticipated by analysts but is still up from the previous 40-year high of 6.8% in November.
In contrast, Federal Reserve Chairman Jerome Powell has reaffirmed his commitment to keeping interest rates low for the foreseeable future. The Central Bank chief stated that while the FED is prepared to raise rates eventually, that is not anticipated to happen any time soon. The comments by Powell have led many in the market to hope that the FED will remain accommodative and that monetary policies won’t be too severe in the immediate future.
In his testimony in front of the US Senate, Powell also said that he foresees more conventional financial institutions getting involved in Stablecoins, implying a somewhat positive outlook by the FED towards the Crypto market amidst uncertainty regarding the role of government oversight and regulations towards Stablecoins. Recently USDC, the Coinbase-backed USD stablecoin, has surpassed USDT as the number one stablecoin on Ethereum in terms of the total supply. Notably, the current total supply of USDC on Ethereum sits at 39.92 billion compared to USDT’s total supply of 39.82 billion.
Dogecoin prices went up by over 25% before correcting, following Elon Musk’s announcement that Tesla is now accepting DOGE as payment for merchandise and products in the Tesla store. All purchases in DOGE are final, and Tesla will not issue refunds, returns, or exchanges for any items purchased with Dogecoin.
A survey by VISA revealed that 24% of SMEs are looking to begin accepting Crypto payments. Likewise, 73% of respondents stated that they believe that it will be crucial for their growth to accept new forms of digital payment in 2022.
A research article by Bank of America analyst Alkesh Shah opined that Solana could potentially become the VISA of the Crypto ecosystem and that the network can take significant market shares away from Ethereum. The report cites Solana’s industry-leading transaction throughput and low average transaction fees as crucial factors that differentiate Solana from Ethereum, driving the platforms’ success so far.
Multinational entertainment and media conglomerate Walt Disney Company has successfully had its patent for a “virtual-world simulator” approved as part of their next steps in creating a Disney Metaverse. The simulator will be comprised of 3D maps of real-world venues by Disney and will also incorporate technology such as 3D image projection and tracking systems as Disney looks to explore headset-less augmented reality.
Finally, new calculations from Bloomberg put CZ’s, Binance’s CEO, net worth at $96 billion, making him the 11th richest person globally. This estimate makes Zhao the wealthiest person in the Crypto world and ranks his fortune alongside industry titans like Warren Buffet ($116 billion) and Meta owner Mark Zuckerberg ($124 billion).
Weekly Technical Analysis: 17 – 23 January 2022
Bitcoin (BTC)
BTC is starting to make higher lows; however, it will be difficult to have confidence in the rally until BTC can break through the $50,000 resistance level. In the short-term BTC is likely to continue to trend sideways and the support level at $39,500 must remain intact if BTC is going to be able to manage an upwards reversal.
Ethereum (ETH)
ETH is having a similar rally to BTC and is likely to trend sideways in the short-term until it can break through resistance at $4,000. Support is set at $3,000 like last week.
Fantom (FTM)
FTM is up by 34.6% over last week and is approaching its all-time high again. Traders are advised to adopt a buy-on-dip strategy when prices fall towards support at 96 Baht. If support can remain intact and FTM can successfully break through resistance at 128 Baht, the Fantom token can set a new ATH.
Cardano (ADA)
ADA is up by over 18.2% from last week. If ADA can break through resistance at the 53 Baht level, it will successfully reverse into an uptrend. Support is set at 46 Baht, and traders should consider cutting their losses if ADA sees a correction and the support cannot remain intact.
Trading and Investment Considerations For The Week
Since bottoming out at $39,500, BTC has rebounded, aided by expectations that the FED will not be raising interest rates or implementing dramatically austere monetary policies in the immediate future. Investors’ increased confidence in the market has bolstered trading activity, causing activity to pick up leading into this week.
Regardless, investors are advised to keep an eye on the FOMC meeting later this month, as any announcements by regulators coming out of the meeting could significantly affect the Crypto market. It is uncertain how many interest rate hikes the FED will announce; however, many have raised concerns that the Central Bank could enact more than four rate increases throughout 2022 to combat rising consumer prices and inflation. This would likely negatively impact the Crypto market and token prices.
If the FED continues with the widely-expected three hikes plan, the market should be able to rally. Until January 27, the digital asset market and BTC prices are anticipated to move sideways until there is greater clarity regarding the monetary policy moving forward.
If inflation remains high but doesn’t rise too fast (5-7% range), this could give the FED enough confidence in the market’s recovery to prevent them from raising the interest rates or reducing the balance sheets too quickly. This could prove to be the most beneficial scenario for Bitcoin, as high inflation rates often prompt many investors to buy BTC as a hedge against inflation.
However, inflation rates spiraling out of control could cause the FED to adjust interest rates accordingly to stem inflation. This would likely cause liquidity in traditional financial markets to decrease, potentially leading to a detrimental impact on BTC prices as investors look to sell-off their assets and maximize their USD holdings.
If inflation significantly drops to the 3-4% level or lower, there may be a moderately beneficial impact on Bitcoin. The FED would likely hold off on enacting its more drastic monetary policies to curtail its liquidity programs leading to greater confidence in the market. However, this could potentially be canceled out by less market demand for Bitcoin as investors no longer feel the need to hedge against inflation.
*Materials on Bitazza Weekly Newsletter are intended to be used and must be used for informational purposes only. The views, information, or opinions expressed are solely those of the individuals involved and do not necessarily represent those of Bitazza and its employees. The information contained herein is not intended to be a source of advice or financial analysis with respect to the material presented, and the information and/or documents contained in this website do not constitute investment advice.
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