Bitazza Crypto Weekly: Is The Crypto Downturn Real? -

Crypto Weekly: 7 – 12 December 2021

Bitcoin tumbled by nearly 20% over the weekend, causing the entire digital asset market to drop as well. Many attribute this sudden correction to Evergrande, China’s second-largest property developer, defaulting on their debts and the heavy sell-offs that ensued as a result.

Despite stablecoin issuer Tether publicly declaring that they do not hold any commercial papers or securities issued by Evergrande, uncertainty is beginning to build over whether US regulators will step in and pay greater attention to stablecoins soon.

Nayib Bukele, president of El Salvador, doubles down on his commitment to Bitcoin, purchasing an additional 150 BTC during the slump. According to Bukele, the BTC was purchased at an average price of $48,670 during the dip. Similarly, MicroStrategy has declared that they have purchased approximately 7,002 BTC, worth $414.4 million, between October 1 to November 29. The company now holds roughly 121,044 BTC in its holdings.

Meanwhile, MicroStrategy CEO Michael Saylor responded in an interview that he considers Bitcoin the world’s best reserve asset and that despite any volatility, BTC remains the best performing hedge against inflation. He goes on to say that while you’re unlikely to want to pay for a coffee with your Bitcoin, BTC’s strength as an asset is bright.

Global asset management company Fidelity has officially announced the launch of their “Fidelity Advantage Bitcoin ETF” and “Fidelity Advantage Bitcoin ETG Fund” in Canada that will allow investors to gain exposure to the Bitcoin Spot market. Once officially approved, Fidelity will likely soon become one of the world’s largest digital asset fund managers.

Interestingly, a report from university researchers in Australia is claiming that ETH is a superior store of value to Bitcoin. The report cites the deflationary measures enacted in EIP-1559 as the main reason why ETH has better long-term value storage than BTC. Comparing the two, the researchers have calculated that the expected increase in total ETH supply is only 0.98%, less than half the 1.99% increase in Bitcoin supply in the same period.

Jack Dorsey’s Square, the parent company of Cash App and Tidal, has announced that it will be changing its name to Block. This move reflects Square’s growth from initially just a mobile credit card payment processor to now a wide-ranging company that endeavors to adopt, utilize, and lead blockchain-related technology in its initiatives. This rebranding brings together numerous projects under the unified Block umbrella, including Square itself, Dorsey’s Bitcoin-focused DEX, music and video streaming platform Tidal, and Spiral.

In terms of global regulatory news, South Korea has announced that they are postponing plans to tax virtual assets until 2023. This delay may be an attempt by legislators to appeal to younger voters ahead of the upcoming elections in March. Also of note is that while the Indian government has announced that they have not outright banned Crypto, it may be introducing further regulatory measures in upcoming bills.

Finally, Crypto trading platform Bitmart announced over the weekend that they had experienced a “large-scale security breach” and that hackers had withdrawn approximately $150 million in assets. Bitmart has said that they will reimburse the victims of this attack.

Weekly Technical Analysis: 7 – 12 December 2021

Bitcoin (BTC)

BTC dropped as far down as $42,000 before rebounding somewhat. If BTC can remain above the $42,000 level this week, that should signal the end of the downtrend. Even if support can remain intact, however; it remains uncertain how long it will take for BTC to recover into an uptrend. To signal a bullish recovery, BTC will have to break through resistance at $54,000.

Ethereum (ETH)

ETH fell in tandem with the rest of the market but has a faster rebound than other tokens, including BTC. If ETH’s support at $3,900 remains intact this week, ETH can avoid entering another downtrend. If ETH can successfully challenge resistance at $4,500, ETH will be in an uptrend again. For now, ETH appears to be trending sideways.

Terra Chain (LUNA)

LUNA is up by +33% over the past week and set an ATH over the weekend. Traders looking to enter a position should look to buy on dips while keeping an eye on support at 1,900 Baht. Traders and investors are cautioned to keep in mind that LUNA is a relatively volatile token and can face heavy corrections, so it is advised that traders avoid chasing the market and manage risks appropriately.

Polygon Network (MATIC)

MATIC is up by more than 21.5% over the past week. MATIC still has an opportunity to continue to create new highs, and this downturn could be a lower risk opportunity to enter a position. MATIC will look to test resistance at the 88 Baht level, and if the support at 62 Baht remains unbroken, the uptrend should continue.

Trading and Investment Considerations For The Week

Bitcoin fell as far down as the 61.8% Fibonacci Retracement level, suggesting that BTC could hit a bottom at the $42,200 level. If BTC fails to create new lows, we could potentially see the trend gradually recover as Bitcoin closes out its Wave 4 Motive phase and looks to create new highs once more in Wave 5.

However, it is unclear how long it will take for the market to recover, with macroeconomic factors such as the Omicron COVID variant and the potential impact of Evergrande defaulting potentially having unpredictable effects on the digital asset market.

Some tokens have managed to outperform the market this week; that is to say, they fell less than the market corrected. These include LUNA, which set an all-time high over the weekend, and ETH, which showed its strength by rebounding out of the market slump faster than other tokens.

NFT Game tokens like GALA, MANA, and SAND have also outperformed the market and could make attractive trading options during this time. Furthermore, with the market downturn pushing prices down somewhat, now could be a good time for medium or long-term investors to enter a position on these tokens as they are no longer trading near their risky ATHs.

For those that have funds left in reserve, this round of correction could be a good opportunity to invest in tokens that have high long-term growth potential for the long term. This includes market-leader Bitcoin, with this most recent round of price correction driven by market news and speculation rather than any meaningful shift in fundamentals for BTC.

Despite the current outlook of the market appearing somewhat negative, the long-term outlook remains unchanged. All things considered, the ever-present specter of inflation means that future demand for Bitcoin is likely to continue to grow as BTC continues to prove itself as a hedge against inflation despite volatility. Also, keep in mind the potential growth of the Metaverse in the next few years and how that may impact the tokens you can invest in today.

*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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