Blockchain News

Chung’s Weekly Digest (9/26)

Our financial market analyst Chung Yee says: The crypto market is in an accumulation phase. It is key to spot the right narratives for the next bull cycle.

Finding the Next Narrative

Bitcoin ($BTC) dipped below $19,000, as bearish sentiments continue to dominate the equities and crypto markets. Investors prefer to adopt a wait-and-see approach while the global economy is still reeling from post-pandemic inflation.

$BTC is still trending down on the macro timeline and lower lows can be expected unless key price resistance is breached convincingly.

Generally, bear markets are the time for accumulation. Since the crypto market is narrative-driven, finding the next narrative can be an enriching pursuit. In the summer of 2020, the market experienced a Decentralized Finance (DeFi) boom. This was subsequently followed by a crypto bull market that saw Non-Fungible Tokens (NFTs) and the Metaverse themes taking center stage.

The Merge has been successful and Ethereum ($ETH) will likely be a preferred asset for institutional investors because of the deflationary pressure and the utilities it packs. However, in terms of raw performance, Ethereum is still unable to match the likes of other layer-one solutions such as Solana ($SOL), Cosmos ($ATOM), or Avalanche ($AVAX).

This predicament will not be resolved anytime soon. This may lead to a layer-two war in the Ethereum ecosystem. Three layer-2 platforms that offer scaling solutions to the Ethereum ecosystem are Optimism ($OP), Arbitrum and zkSync. Ethereum is the most dominant smart contract platform and has $31.4 billion in Total Value Locked (TVL), more than all other chains combined. Layer-two scaling solutions will have a lot of upside to offer.

The Metaverse theme will likely make a run in the next bull cycle and can potentially launch projects such as Sandbox and Decentraland into the stratosphere

Facebook’s rebranding to Meta has brought much attention to metaverse projects. The pandemic has accelerated the pace of development in the virtual space. The Metaverse theme is likely to become a mainstay as most interactions, whether social or economic in nature, can be done virtually.

Weekly Recap

Market Sentiment

Crypto market sentiment has again fallen to “extreme fear” as $BTC failed to stay above the crucial $20K mark. Liquidity is thin because the costs of borrowing are high. The interest rate hikes will likely slow down; if not, the U.S. economy will be brought to a grinding halt. This will inevitably lead to a recession.

Long-term and mid-term holders are not liquidating their position and will not be likely to do so even if the $BTC price continues to dip.

$BTC might not be suitable as a medium of exchange but it can certainly play a crucial role as a hedge against other traditional assets. The crypto winter is expected to last until inflation stabilizes. Costs of raw materials, availability of food supplies, and the energy crisis are all capable of tanking the global economy. Investors’ confidence can only be restored if these looming problems are resolved.

Coins to Watch

  • Gala ($GALA) - Gala games is a play-to-earn gaming platform that allows players to take ownership of items earned during gameplay.
  • Gala was launched on the Ethereum blockchain but has since bridged to the Polygon network and BNB Chain.
  • Gala tokens have value because it is a medium of exchange within the Gala Games ecosystem.
  • The Gala token is also used to incentivize active participants by their milestone achievements.
  • $GALA is now trading at -95% from its all-time high price of $0.82.
  • PancakeSwap ($CAKE) - PancakeSwap is the most dominant Decentralized Exchange (DEX) on the BNB Chain.
  • Apart from functioning as a decentralized exchange, the platform also packs a suite of products and services.
  • PancakeSwap has a lively community and an active team that constantly engages with its community and implements changes to its platform.
  • This project has been plagued by high emissions causing inflation to its token.
  • This has been countered by introducing more deflationary mechanisms into its tokenomics and limiting its total token supply.
  • Reserve Rights ($RSR) - $RSR recently had a stellar run ahead of its mainnet launch.
The $RSR price action could be triggered by news of a mainnet launch but the project has a solid and functional value proposition
  • The Reserve protocol has a mobile app that functions like Venmo or CashApp but with crypto.
  • The app now has 700,000 users and $120 million a month in transaction volume.
  • Countries that suffer from hyperinflation can transact in U.S. dollars. By using the app, users do not need to understand crypto and the intricacies tied to it. The experience is seamless and it meets a need perfectly.
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