The Federal Reserve took the steam out of cryptocurrencies at the end of the year when it made a hawkish turn which largely spared other risk assets. Looking forward into 2022, central bank policy is taking a key role in the debate about the outlook for crypto for this year. It seems much has to do with to what extent Jerome Powell’s Fed will tighten policy in order to stem inflation. Many analysts believe the answer to that puzzle will help determine whether Bitcoin follows its 60% gain in 2021 with another banner year. Another school of thought holds that as companies such as the Meta Platforms Inc. (formerly Facebook) and Apple Inc. push deeper into the metaverse, consumers will keep piling into non-fungible tokens, and that alone will push crypto higher regardless of the macroeconomic forces at play. Some previous examples of this process were the sale last year of an NFT artwork for $69.3 million at Christie’s, and the loosely organized group of crypto investors that battled billionaire Ken Griffin at an auction for a copy of the U.S. Constitution.
We asked four market-watchers to discuss their outlook for BTC and for the wider crypto universe in 2022. Here’s what we got: regarding Bullish Bitcoin Technicals – “We are bullish Bitcoin long-term, based on our long-term trend-following gauges,” Katie Stockton, founder and managing partner of Fairlead Strategies LLC, said in an email. She continued, “We assume the long-term uptrend will maintain itself and a more decisive breakout to new highs would allow for an impressive measured-move projection of approximately $90,000. For now, a corrective phase still has a hold, although there are potential signs of short-term downside exhaustion.” And in regard to the Fed and the Metaverse: Antoni Trenchev, managing partner of crypto lender Nexo, said in an email, “The No. 1 influencing factor for Bitcoin and cryptocurrencies in 2022 is central bank policy. Cheap money is here to stay which has huge implications for crypto,” as “the Fed doesn’t have the stomach or backbone to withstand a 10%-20% collapse in the stock market, along with an adverse reaction in the bond market.”
Trenchev sees a choppy 2022 yet forecasts that Bitcoin will reach $100,000 by the end of June. He also doesn’t expect tokens such as Solana and Avalanche to offer the same exponential gains as they did in 2021, but rather “these upstarts — awash with arrogance, attitude and funky narratives — will face the same scaling challenges that Ethereum and other older protocols faced. What I’m really excited about in 2022 is the metaverse. The ‘birth’ and use of the term metaverse is a beautiful mess, and it has a lot of potential. It will be one of the overarching themes: the metaverse, the infrastructure building, and then the NFTs that will make up part of the economy.” On the other hand, Jeffrey Halley, senior market analyst at Oanda Asia Pacific, explained via email that, “Although I expect the speculative zeal to continue in the crypto space, it, like bloated technology valuations, faces a much more challenging environment in 2022. The primary reason is the start of interest-rate normalization by the Federal Reserve, but with other major central banks likely to follow, as well. That will challenge the raison d’être that crypto is an alternative to fiat money.”
Halley continued, “Hanging over the crypto space is the threat of more regulation and frankly, with a new coin coming out every week which is ‘the next big thing’ and driven by speculation and not blockchain, I’m struggling to see how any of them will be. I continue to believe that cryptocurrencies are the greatest case of financial-market group-think stupidity in history. The music may keep playing for part of 2022, but the emperor still isn’t wearing any clothes.” We will see if his FUD remains what it is or if there was any truth behind his words. Finally, Philip Gradwell, chief economist at Chainalysis, reported by email that, “The race is on to be the app store for crypto. A major lesson of Web 2.0 was that consumers love platforms, and I don’t think that is going to change for Web 3.0. Currently there is no crypto platform that owns the customer relationship and aggregates suppliers. I predict that in 2022, many companies will race to build this platform, with Coinbase in the lead as it integrates DeFi and NFTs.”
Bitcoin’s Price Will Hit $100k By Mid-Year, Nexo Founder, And Others, Predict
In a follow-up to the previous article, Antoni Trenchev, the co-founder and managing partner of Nexo, a major cryptocurrency lender, has predicted that the price of Bitcoin will be $100K by mid-2022. In an interview with CNBC last Monday, he highlighted “two simple reasons” why he is bullish about the price of Bitcoin this year. “I think [Bitcoin’s] going to reach $100,000 this year, probably by … the middle of it,” Trenchev said. First of all, he pointed out that institutions are increasingly putting Bitcoin in their corporate treasuries. For instance, the Nasdaq-listed company Microstrategy purchased 124,391 BTC for its treasury. Secondly, Trenchev expects “cheap money” is here to stay, which would boost the prices of cryptocurrencies. His company Nexo has issued more than $6 billion in credit and manages assets for more than 2.5 million users globally.
It’s no secret that the Federal Reserve is expected to raise interest rates several times this year. Wharton finance professor Jeremy Siegel recently predicted that “The Fed is going to have to hike many more times than what the market expects.” Discussing the implications of rate hikes further with CNBC, Trenchev added, “I quite frankly think that as soon as we see a rate hike, it’s going to be a dip into equities and the bond market — and quite frankly, the last few years, we haven’t seen much political will to … power through any sort of correction in the traditional financial markets.” The president of El Salvador, Nayib Bukele, also recently predicted that the price of Bitcoin will reach $100,000 this year. Meanwhile, the CEO of Microstrategy, Michael Saylor, foresees Bitcoin’s price reaching $6 million. However, some people remain skeptical about the price of the cryptocurrency, including Bridgewater Associates founder Ray Dalio.
Is It Time to Be Bullish on Shiba Inu Again?
Meme tokens are known for having the ability to fetch their HODLers with astronomical returns within short spans of time. Shiba Inu is the market’s second-largest meme-coin, and it has time and again delivered on such lofty expectations. The debate surrounding whether or not meme-coins make good investment options is loaded with differing viewpoints. Usually, market participants who do not advocate coins from this category either have never traded them or they buy, book profits, and then quickly sell. On the other hand, ‘loyal’ holders stay within the ecosystem, come what may. To a fair extent, it seems more than likely that the Shiba Inu profit-booking season has likely concluded as swing traders have mostly been filtered. Even so, staunch holders currently compose the majority of Shiba’s buyers.
The number of profitable addresses for Shiba holders witnessed a steep decline during the November-December period. Presently, this line has flattened, and thus, it becomes clear that longer-term holders are clinging onto their positions and have not exited the SHIB market lately, despite the monotonous price trend. By and large, this is a good sign for the coin. And then, so is the strength of incoming whale buying: new participants entering the market with huge buys. One WhaleStats’ recent tweet highlighted that the prominent ETH whale “Gimli” bought 110,000,000,000 SHIB worth approximately $3,624,500. To be sure, it should be noted that transactions of similar volumes in the past had triggered the most prosperous SHIB rallies. In fact, in the September-October period right before Shiba Inu’s massive uptrend, it was noted that a particular whale had purchased over 6.17 trillion SHIB tokens. That same whale ended up purchasing another 276 billion tokens in succession just after that purchase in three distinctive transactions.
So, expecting SHIB to react positively to Gimli’s recent purchase wouldn’t be merely speculative, but would be a sound expectation. Sure enough, by the end of last week, the sentiment was gradually seen flipping towards the bulls. In fact, ITB’s data highlighted that SHIB’s bull to bear ratio has been more than 1 over the past few days, which implies that the bulls have started asserting command in the market. Interestingly, the pendulum of the trades per side metric was also seen oscillating definitely more towards buy than sell at the same time. By Friday morning, the buy-sell difference reflected a positive value of 80 billion tokens. If this buying spree continues, SHIB’s price-rise would be almost inevitable. In fact, many seasoned traders believe that the odds of this meme-coin surging even amidst its current bearish trail remains quite a good possibility. In all, SHIB’s short-term prospects seem to be quite appealing at the moment.
Vitalik Buterin Gives An Estimate On Ethereum 2.0’s Completion Status
Speaking on the Bankless YouTube channel, Vitalik Buterin gave his best opinion on the timeline for the completion of Ethereum 2.0. During the interview, Buterin covered various topics, including what makes him happy, maximalism, and layer 1’s. But the main theme of the discourse centered around the development of Ethereum 2.0, and in particular, the “Endgame” blog article he posted in early December 2021. This piece had set out a plausible roadmap to realize his vision for a trustless and censorship-resistant chain. During the recent Bankless interview, Buterin talked in great detail about the updated path to Ethereum 2.0. He explained that on December 1, 2021, the first anniversary of the Beacon Chain launch, his tweet included an updated roadmap diagram which follows five distinct groupings labeled: the merge, the surge, the verge, the purge, and the splurge.
The merge refers to the convergence of the two parallel Ethereum chains. This event will mark the transition from Proof-of-Work to a Proof-of-Stake chain. The surge relates to increasing scalability through rollups and sharding. Rollups are scaling solutions that execute transactions off of the main chain, but with the proof of transaction made on layer 1. Sharding can be thought of as dividing traffic across 64 new chains, thus spreading the network load. The verge is about stateless clients, which is a scaling methodology intended to reduce the state size of Ethereum. Doing this will make node operation much more efficient. This ties in with the purge, which seeks to enhance node efficiency by eliminating historical data. “New accounts are continually being added and new smart contracts are being deployed. Therefore, by design, the state size of Ethereum keeps growing ad infinitum,” Buterin stated.
Finally, the splurge signifies going all out on extras, including building censorship resistance functionality. So then, just how far along is Ethereum 2.0? When asked to grade roadmap progress to date, Buterin said, “We’re currently about halfway there.” He then spoke of the next milestone, the merge, being 60% complete. “I would say around 50. I’d be willing to go past 60 once the merge is fully complete, and I’d be willing to go past 80 once we have a full sharding implementation.” According to Consensys, the merge is expected to happen in Q1/Q2 this year. But delays setting off the difficulty time bomb suggest this may not occur on time. The difficulty time bomb will make mining ETH progressively more challenging until it’s uneconomic to do so at all. This process intends to phase out miners gradually. But it’s unclear how long a “gradual” phase-out will take. Buterin mentioned that all five roadmap categories are being worked on simultaneously rather than in distinct stages with clear cut-offs in-between.
Shark Tank’s Kevin O’leary Explains Why He Is Bullish on NFT’s
Even as NFTs have managed to capture the attention of the entire globe, the question on everyone’s mind is, can they outperform the world’s largest cryptocurrency? Shark Tank’s Kevin O’Leary, aka “Mr. Wonderful,” believes so. Appearing in a recent interview with CNBC, O’Leary pointed out the crypto market has been in awe of the NFT space. With almost every celebrity diving into the non-fungible asset pool, the crypto world has witnessed increased adoption. Even though it is relatively new to the digital world, the NFT space has quickly managed to score big. O’Leary expressed his bullishness towards these tokens and suggested that they had the potential to become “much bigger than Bitcoin” since they had the ability to lure in more capital when compared to Bitcoin. O’Leary believed they could do so since they had the ability to tokenize or digitize physical assets like watches, cars, and so on. He further added, “You’re going to see a lot of movement in terms of doing authentication and insurance policies and real estate transfer taxes all online over the next few years, making NFTs a much bigger, more fluid market potentially than just Bitcoin alone.”
Despite laying out a narrative that NFTs would become much bigger than Bitcoin, O’Leary suggested that he would be investing in both of these markets. The Shark Tank investor wasn’t always a fan of crypto. However, O’Leary eventually became smitten by Bitcoin, and this caused him to invest in WonderFi. When the firm acquired the prominent crypto exchange Bitbuy for a whopping $161.8 million in cash and shares, this was proof enough that O’Leary was solidly invested in both the traditional crypto-asset market as well as NFT’s. O’Leary stated during the interview with CNBC, “We’ll see what happens, but I’m making that bet and I’m investing on both sides of that equation.” The Shark Tank investor possesses a variety of cryptocurrencies in his portfolio. Previously, Mr. Wonderful revealed that he held “a lot of Ethereum.” Along with this, his portfolio included Solana [SOL], and Polygon [MATIC].
The post <h5>Digital Asset Insights #49</h5> <h3>Do You Believe Bitcoin Will Hit $100,000 In 2022? We Asked the Experts</h3> appeared first on JP Fund Services.