Weekly Digest: Chung's Picks of the Week (5/12)

‍

Bitcoin’s Massive Dip

Bitcoin fell below the $1 trillion market cap after suffering a massive dip bringing the whole crypto market into double-digit losses. It staged a slight recovery and is now trading at $48,927 at the time of writing. Bitcoin hit a low of $43,531 according to the data on Coingecko at approximately 5.34 a.m. UTC on December 4.  

Ethereum was not spared. Ethereum fell to a 24-hour low of $3,497, a drop of more than 16%. Leverage trades were flushed as open interest has been at an all-time high, suggesting that most leveraged trades are long. This could be an indication of a healthy market correction as the crypto market decouples from its 2017 trend.  

Weekly Recap

• El Salvador’s move to adopt Bitcoin as its legal tender continues to receive negative responses from regulators around the world. 
• Binance Smart Chain(BSC) approves BEP-95, to increase the burn rate of the BNB coin. 
• US-based crypto exchange, Kraken, lists $AXS and $CHZ on its platform. 
• Crypto.com acquires two exchanges as it continues to push its marketing and expansion plan.
• Bank of America sees massive opportunities in the metaverse.
• Adidas enters the metaverse with a four-way collaboration with Bored Ape Yacht Club, Punks Comic, and Gmoney. 
• Kelly withdrew their Ethereum based Exchange Traded Fund (ETF) application.
• Market tanks as the fear of rising interest rates send stocks plummeting in US and Europe. 

Market Sentiment

• On-chain analyst Will Clemente told CNBC that the 4th December sell-off could be a set-up for another bull run.  

Will Clemente said to CNBC, “There’s a reasonable case that we could see the opposite effect heading in Q1, as funds are willing to take on more risk for the new year with fresh profit and loss…this effect assisted in bitcoin’s massive move in January 2021.”

• Willy Woo, a popular Bitcoin analyst points to a V-shaped recovery as ‘shrimps’ are buying the dip.

• Rising inflation will continue to haunt the market as interest rates will have to rise. Investors will likely stay on the sidelines until a clearer market direction emerges. 
• Rising interest rates will increase the cost of borrowing. There will be less liquidity in the market. Between 1980 top 1981, the Fed raised interest rates to 19% to curb inflation.
  

• Traditional brands are starting to realize the potential of the metaverse. Nike entered the metaverse with ‘Nikeland’ and Adidas is creating its version with its strategic partners. 
• Crypto assets are hugely discounted after two big dips within a short span of about a week.
• TerraUSD ($UST) holds its value as an algorithmic stablecoin despite the current market dip. 
• Major altcoins will likely stage a rebound as the market is in ‘oversold’ territory. 
• US regulators are still uncertain about the regulatory framework to impose and this is causing a lot of anxiety amongst institutions and retailers. Investors will likely look for other jurisdictions with a well-defined compliance framework and policy. 

‍

Coins to Watch

• Ethereum ($ETH) will likely be making great strides in the coming months. Its market capitalization of $494 billion has surpassed every global bank’s market cap. JP Morgan Chase is trailing behind Ethereum with a $467 billion market cap. 
• If the market recovers by this coming week, which is very likely, Bitcoin ($BTC), Ethereum ($ETH), Chainlink ($LINK), Binance Coin ($BNB), Polkadot ($DOT), Solana ($SOL) and Terra ($LUNA) will likely return to its previous price.  
• Decentralized Autonomous Organizations (DAOs) such as OlympusDao ($OHM), Klima Dao ($KLIMA), Wonderland ($TIME), and Snowbank ($SB) will be interesting projects to keep an eye on. OlympusDao and the forks of OlympusDao such as $KLIMA, $TIME and $SB continue to promise astronomical Annual Percentage Yield (APY). Its longevity may be short-lived. 
• Fantom ($FTM), Avalanche ($AVAX), and Matic ($MATIC) are good and fundamentally sound projects that will likely stage a strong recovery to test its all-time high again. 

‍

2022 Will Make Early Adopters Rich (Airdrops)

• Metamask will likely introduce its $MASK tokens in Q1 of 2022. The popular crypto wallet that is widely used will likely reward its community with generous airdrops that may eclipse the value of previous airdrops such as $UNI, $1INCH, $DYDX, and $ENS.

• zkSync a widely used L2 solution to the Ethereum network is also widely speculated to issue its own tokens in 2022. 
• Optimism is another scaling solution for Ethereum may also potentially list is token in early 2022. 
• Zapper.fi, a Decentralized Finance (DeFi) dashboard, is also on the list for potential airdrops.
• The best way to be eligible for these potential airdrops is to use its service like an ordinary user. Metrics such as quantum and frequency will likely be the pre-qualifying conditions to avoid airdrop farming. 
• The idea behind giving airdrops is to reward its loyal community and not strangers that wish to game the system for profit. 

‍

Closing Thoughts

The market is both forgiving and merciless. Throughout this bull run, there are massive dips that present good buying opportunities. It also punishes greed each time optimism skyrockets. A good indicator is the ‘Fear and Greed Index’. 

Generally, any investment in projects that have an underlying value will be positive in the mid to long-term time frame. Micheal Saylor’s long-term bet on Bitcoin is probably the best strategy in a volatile crypto market. Thinking like an investor rather than a trader will put the market in better perspective. 

Finally, It is impossible to always sell at the highest or buy at the lowest, hence the dollar-cost averaging strategy is one of the best strategies to adopt. There is more than one way to make money from the crypto market without risking it all. Targeting potential airdrops by participating meaningfully in projects that contribute to the crypto ecosystem is a viable alternative.

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett
‍

Come back next week for another iteration of Weekly Digest: Chung's Picks of the Week from BSC News. Be sure to follow Chung on Twitter.

‍

Don’t forget to download the BSC News mobile application on iOS and Android to keep up with all the latest news for Binance Smart Chain and crypto! Be sure to join the DeFi Direct Discord to participate in all the community discussions and events!