Bitazza Crypto Weekly: Will The Crypto Bear Market Follow The Dot Com Bubble Burst? -

Crypto Weekly: 24 – 30 January 2022

The severe corrections seen by Bitcoin and the rest of the digital asset market and tech stocks on NASDAQ over the past two months have led many to draw parallels between the Dot Com crisis in the early 2000s that ravaged internet-related companies and the current Crypto downtrend.

Some analysts forecasting a similar crash to the dot com crisis have argued that a correction all the way down to the $15,000 level is not out of the question, which would represent an 80% drop from BTC’s all-time high in 2021.

Despite the negative performance, it’s important to note that the fundamentals and use cases of both cryptocurrencies and tech stocks are much more robust than in the past. Both have seen significant demand from institutional-level investors and stakeholders, including Central Banks, with nodes and users spread out all over the world. In addition, the widespread adoption of blockchain technologies such as DeFi products and NFTs clearly demonstrates the strong adoption and use case of Crypto, suggesting a crash akin to the dot com crisis when the majority of the early tech companies were in their infancy is unlikely to be seen.

Nayib Bukele, President of El Salvador, announced that the South American nation had purchased an additional 410 BTC for $15 million during the market drop. El Salvador now holds over 1,500 BTC in their treasury and has plans to begin issuing a $1 billion, 10-year Bitcoin bond in 2022.

In contrast, Russia’s central bank has proposed a ban on the use and mining of Cryptocurrencies in Russia, citing threats to financial stability, citizens’ wellbeing, and Russian monetary policy sovereignty. The Russian report also goes on to argue that cryptocurrency mining is detrimental to the environment, compromises the country’s energy supply, and jeopardizes their attempts to become more “green.”

Meanwhile, Binance has successfully enacted its first-ever BNB auto-burn event. The new automated burning mechanism is intended to bring greater clarity to BNB burns, with the most recent lot permanently removing 1.68 million BNB from circulation in the project’s 18th token burning.

According to a report from The Financial Times, Social media conglomerate Meta is exploring plans to let users create, showcase, and sell NFTs on Facebook and Instagram. While Meta has not officially corroborated the report, rumored plans include support for NFTs to allow users to display their digital collectibles and an NFT marketplace on Meta platforms.

Similarly, Twitter is also exploring the NFT-space and has rolled out a new feature that lets users display their NFTs as their Twitter profile pics. To use the feature, users must connect their Twitter accounts to the Crypto wallet that holds their NFT (currently Argent, Coinbase Wallet, Ledger Live, MetaMask, Rainbow, and Trust Wallet are supported). This feature is currently only available to Twitter Blue users on iOS, which has a subscription fee of $2.99 per month.

Walmart also appears to be preparing to venture into the Metaverse, with several filings with the US Patent and Trademark office suggesting that the retail titan is looking to create its own cryptocurrency and begin creating their own collection of NFTs. These initiatives are part of Walmart’s exploration of how e-commerce and the virtual retail experience may develop on the emerging Metaverse and within the Web 3.0 infrastructure.

Finally, the South Korean science ministry has unveiled plans to develop a Metaverse market that it aims will become one of the world’s top five largest Metaverse markets by 2026. Part of this initiative will include working with 220 Metaverse companies to create a “Metaverse academy” to produce 40,000 trained Metaverse professionals by 2026. The statement also includes South Korea’s belief that the Metaverse has the potential to create and support over 1.5 million jobs in the virtual ecosystem.

Weekly Technical Analysis: 24 – 30 January 2022

Bitcoin (BTC)

BTC is in the midst of a heavy correction with a support set as low as the $34,000 level. If this support cannot remain intact, the downtrend will continue for some time. If Bitcoin is able to rally, it will look to break through resistance at the $40,000 mark.

Ethereum (ETH)

ETH dropped as low as $2,300 during this round of corrections. Keep an eye on the support level. If prices remain above the $2,000 level and can break through resistance at $3,000 ETH has a chance to reverse into an uptrend once more.

Velo (VELO)

VELO has managed to outperform most altcoins on the market and was able to generate positive returns at +00.5% over the past week. Support is set at the 1.20 Baht level. If VELO can successfully challenge and break through resistance at 4.50 Baht this week, the chances of an upwards reversal increase exponentially. Traders looking to enter a VELO position are advised to buy on dips.

Dogecoin (DOGE)

DOGE fell by 19.1% over the last week, which is comparatively better than most altcoins in the rest of the market. Short-term resistance is set at 5.6 Baht. Traders could make a profit buying the dip if DOGE prices fall but don’t create lower lows in the short term.

Trading and Investment Considerations For The Week

With Bitcoin falling to remain above the support level at $37,500, the downtrend is likely to continue for some time as we enter the Bear market. After conducting an Elliot Wave theory analysis on BTC price movements, there are two hypotheses proposed regarding the anticipated direction of BTC.

First, it is possible that Bitcoin is in a Wave C correction. This would mean that BTC is in the final wave of the larger Corrective phase. If this is true, once this wave concludes, we should enter a dominant trend once more, and prices should begin to rally.

However, it is also possible that Bitcoin is in a Wave 4 correction instead. If true, BTC may have a short rally in Wave 5 before embarking on a more extensive corrective trend/phase that could last for the rest of the year. Regardless, prices are not expected to dip below the $20,000 level in either scenario.

Traders and investors are advised to keep an eye on the results coming out of the FOMC meeting later this month. If the FED doesn’t announce any unexpected monetary policy to combat inflation and sticks to the anticipated plan of three interest rate hikes throughout 2022, Bitcoin may be able to recover.

During this correction, long-term investors have an excellent opportunity to accumulate BTC while prices are low. In contrast, short-term traders are advised to wait for signs of a bullish reversal before entering a position as there is no guaranteed way to determine the price floor of this correction.

Traders and investors are cautioned against thinking that they’re buying at the bottom of the market. Avoid catching the falling knife and spread out entries across 3 to 4 price points rather than buying all in one go.

*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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