Crypto Weekly: 22 – 28 November 2021
The digital asset market has been down since President Joe Biden signed the $1 trillion Bipartisan Infrastructure Framework bill that saw overwhelming support from US legislators from both sides of the aisle. One of the more controversial topics from the infrastructure bill is that US businesses and citizens will now be required to report all digital asset transactions worth more than $10,000 to the IRS as well as provide personal identity information such as social security numbers to the government within 15 days.
The taxation of digital assets has long been a contentious topic, particularly with legislators from countries like Japan, South Korea, India, Thailand, and several European countries trying to navigate the ever-evolving Crypto landscape. Although some are concerned that increased regulations and FUD concerning taxation will slow down market growth, in actuality, there is yet to be a firm consensus by regulators regarding how best to tax digital assets. Many legislators around the world are still in the process of learning about the basic fundamentals and potential implications of Crypto, as is reflected by the ever-changing regulations put out by governing bodies.
FUD surrounding Crypto taxation will likely keep coming in short-term waves until there is a widely accepted global standard or consensus regarding the taxation of digital assets.
El Salvador has announced plans to build a “Bitcoin City” near the base of the Conchagua volcano, which will be entirely tax-free with the exception of a Value Added Tax (VAT) for goods and services. The city will have a residential and commercial area and will leverage the nearby volcano’s geothermal capabilities to power Bitcoin mining. Additionally, El Salvador has also approved plans to raise $1 billion via a Bitcoin bond in order to purchase additional Bitcoin for their treasury and promote energy and Bitcoin mining infrastructure within the country.
Meanwhile, Bloomberg Opinion has reported that Bitcoin has delivered 99.996% deflation over the past ten years. According to their calculations, 1 BTC in 2011 would cost just 0.004% of the current price of 1 BTC, whereas the US dollar has seen a 28% increase in inflation in that timeframe. This supports the consensus held by many investors that Bitcoin is one of the best performing hedges against inflation.
According to SEC filings, Grayscale has revealed that institutional interest in the Grayscale Ethereum Trust continues to grow, with the number of Grayscale Ethereum Trust shares rising by 19% in Q3 of 2021 compared to the first half of the year. In contrast, Bitcoin institutional holdings were down slightly this previous quarter, with Grayscale Bitcoin Trust shares held by large institutions dropping by 2.6%.
Finally, Binance Smart Chain set an all-time high number of daily transactions at 14.7 million transactions. BSC’s record dwarfs the ATH daily transactions of other networks, with Ethereum setting their ATH daily transaction on November 16 at 1.7 million and Bitcoin only able to manage 450,000 daily transactions at its peak.
Weekly Technical Analysis: 22 – 28 November 2021
During the correction, BTC set a low at the $55,000 mark before pulling back up sharply. Support is set at the $55,000 level this week, and if it can remain intact, BTC’s trend should begin to recover. BTC’s overall outlook remains bullish if it can remain above the $50,000 mark and will look to test resistance at the $62,000 level, which could prove to be particularly strong.
ETH followed BTC on the way down before having a similar rebound. If ETH’s support at $4,000 can remain intact, look for ETH to challenge resistance at $4,500. If ETH can break through the resistance level, the DeFi stalwart will return to its uptrend; however, the overall trend for Ethereum is moving sideways for the time being.
AVAX rose by more than 42% in the past week; however, its prolific gains may lead to a potential sell-off by traders looking to lock in their profits. If support at 5,200 Baht can remain intact, AVAX’s uptrend should continue despite a potential correction this week. AVAX will be looking to test its resistance at the 3,600 Baht level in the short term, and traders should consider adopting a Buy-on-Dip strategy.
The Sandbox (SAND)
SAND is up by 40% from last week, and its overall trend remains very bullish. A correction could be viewed as a prime opportunity to Buy-on-Dip so long as the support at 110 Baht remains intact.
Trading and Investment Considerations For The Week
Overall the Crypto market is becoming increasingly active, with Bitcoin showing signs of maintaining a recovery above the $60,000 level, suggesting that the market is likely to return to an uptrend once more. Much of the trading activity is coming from NFT Game tokens which continue to thrive under widespread speculation following the growing Metaverse trend.
However, keep in mind that despite strong performances over the past week, NFT Game tokens may be disproportionately affected by FOMO arising from mainstream Metaverse speculation rather than a realistic assessment of project fundamentals or sound technical analysis. Over the long term, the growing prevalence of the Metaverse will drive the growth of these tokens; however, traders should be prepared in case market sentiments suddenly shift.
The growth of Smart Contract Platform tokens has slowed somewhat this week; however, AVAX continues to perform well compared to other tokens in the same class and continues to set record highs over the past week. Other Smart Contract Platform tokens could potentially follow AVAX’s example and set ATHs if the market can remain bullish in the coming weeks.
While DeFi tokens haven’t generated as robust returns as Smart Contract Platform or NFT Game tokens, the overall trend suggests that there’s plenty of opportunity for growth if the market can remain bullish. Look for DeFi tokens to generate strong returns towards the closing leg of the bull market.
Despite many tokens facing heavy sell-offs over the past week, NFT Game tokens are still mostly trending upwards. Now could be an excellent time to enter a position on NFT Game tokens that have yet to peak, like MANA or ENJ. Also, make sure to keep an eye on GALA this week. A momentary dip could prove profitable if GALA can maintain its surge.
This week make sure to keep a close eye on if Bitcoin starts creating lower lows below the $56,000 level this week. Whether BTC embarks on an uptrend, downtrend, or is stuck moving sideways will have ramifications for the entire digital asset market. One potential factor that could have a noticeable impact on BTC is whether the US SEC approves or rejects any Bitcoin ETF applications to close out November.
*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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