15 January 2022: Over the past two weeks, we watched as the cryptocurrency market fell through key support only to rally back into an uptrend. Both Bitcoin & Ethereum held their support on the weekly - potentially setting up a really nice 2022 Q1.
Despite the optimism in the cryptocurrency market, the global economy is expected to slow down in 2022 & 2023 amidst significant inflation, labor issues, and supply chain problems.
The top highlighted news headlines and reports are available below:
Rio de Janeiro, Brazil to Hold Crypto on Balance Sheet, Give Discount for Taxes Paid in BTC (FX Empire)
Google/YouTube Censoring Bitcoin Magazine Content (Nasdaq)
Every US Taxpayer Will be Asked Questions on Crypto from IRS (Market Watch)
Inflation Hits 7% in December for a 40 Year High (Associated Press)
UN WESP Report Predicts Major Slow Down in 2022, 2023 Economic Growth (United Nations)
- Underwater Volcanic Eruption Triggers Tsunami to Hit Tonga (New York Times)
Crypto-Economy & Markets
Fear in the Bitcoin / Cryptocurrency market has been in a state of fear or extreme fear for weeks now - yet prices have not fallen drastically in awhile. Over the past two weeks, Bitcoin did make a major break lower to under $40,000 but was quickly bought up. It currently remains just above support and primed for a potential retest of $45,000.
A strong move upwards in Bitcoin could end up stalling altcoins for the time being, but nothing is guaranteed as we saw in July 2021 when both Bitcoin and alts rallied together for weeks.
The total cryptocurrency market has rallied 7% in the past week. Since the Crypto Total Market Cap fell through the 200 day moving average, it has rallied nicely with a floor now situated at $2 trillion.
After falling through $40,000, Bitcoin has since rallied above support. Bitcoin is up 4.5% over the past seven days.
Bitcoin is currently sitting just above $43,000 with significant upside should support hold.
The altcoin market, utilizing its strength over the past two weeks, has managed to rally above its 200 day moving average despite market pressures. The altcoin market is up over 9%.
Ethereum needs to push above $3450 to break back above its 200 DMA. ETH is up a respectable 5% in the past week.
The total market cap, minus Bitcoin, is shown below:
Total Crypto Market Analysis
Moving forward, there are two different scenarios with respectable probability for the cryptocurrency market.
The first of these is that what we are seeing in the markets right now is nothing but a bear market bounce which is elevating the average investor's sentiment and encouraging buying. With the fear and greed index already so low, a temporary reversal could see the market trap even more buyers before heading lower.
The second probability is that the market is going to hold at or near present valuations until a major catalyst impacts the world economy. This could come in many forms, including but not limited to:
- Major inflationary pressures
- Deflationary crash due to changes in monetary policy
- Black swan event such as allegations against Tether being proven
It is a risky bet to long cryptocurrencies right now, but that is the name of this game. For us, we are recommending continuing to either hold or dollar cost average your holdings down.
World Economy & Markets
For 2022 and 2023, major world organizations like the United Nations are projecting significant slow downs in the global economy. Two main reasons were cited as the main drivers of this slow down. One is inflation brought on by significant scaling of fiat money supplies coupled with central bank policies. The other is the impacts of the global pandemic substantially impacting the labor market and global supply chains.
A slowdown in the global economy has been expected for a while as much of the economic recovery that transpired after 2020 has been fueled by massive stimulus packages from governments. This combined with historically low interest rates has kept the global debt bubble subdued. However, with significant inflation it is only a matter of time before large changes in policy are needed.
It appears at this point that the world economy is holding its breath, waiting to see what happens with inflation, global supply chains, and more. For crypto, there are a million reasons to be excited about 2022. Development is not going to stop nor is adoption with major countries taking steps to further include it in day to day operations.
In 2021, we saw major adoption of NFTs and Ethereum competitor chains like Polkadot, Cardano, Avalanche, and Algorand. Bitcoin and Ethereum have attracted the interest of significant institutional investors. What will 2022 be a successful year for? Time will ultimately tell.
Coming up next week from RekTimes includes:
- Article on Ampleforth
- Article on Sushiswap
- RekTimes Weekly Markets 1.22
Best of luck over the next week!
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