Discover more from EllioTrades
November 22, 2021
Toxicity Is at a High – What Does It Mean for the Markets?
After the nice weekend rally – especially in the gaming and L1 sector – the "gravity" of the CME gap has brought BTC and ETH back down to where they left off on Friday. What's next is obviously the big question on everyone’s mind.
While we literally could go up, down, or sideways in the short term, one thing is clear: Plan B’s price prediction of $98k at the end of November is probably rather unlikely to materialize. Will he be right with a few months of delay, confirming the lengthening cycle theory? This bullish scenario is certainly in play.
Toxic Sentiment Is Everywhere… Are We In for a Cool Off?
In the last few days, the toxicity on Crypto Twitter has increased to an almost unbearable level. With different crypto communities insulting each other and defending their “bags”, the question arises: Is a serious reality check and pause of the bullish momentum “needed” or is this all just noise that will soon fade away?
One thing is clear: The recent infights in the crypto community are not helping to improve the reputation of the crypto space and will drive quite a few people away...
No matter if the recent controversies will soon ease or are a sign of unhealthiness of the crypto market: With the abundance of new projects and the insane pumps we have seen in recent months, it’s certainly wise to keep your risk profile in check.
Focusing on fundamentally strong projects with fast-growing adoption (or at least strong potential) and tokens that haven’t already experienced massive growth, is the least risky way to navigate this late stage of the bull market.
Aside from the concerning signals from within the crypto space, there is one potential major catalyst every investor has to keep an eye on in the weeks and months to come: The reaction of the Fed to inflation. For now, the central banks in the US, the EU, and the UK are the only ones that haven’t started combatting inflation… Will they be forced to react soon or can they “talk inflation down” and extend the market rally into next year?
With investors anticipating Fed intervention, the US dollar has been soaring lately. An accelerated move could rattle the stock and crypto markets at some point…
On a more positive note, US president Biden today announced the renomination of Jerome Powell (aka, “the money printer”) for a second term as the Fed chair. This brings a sense of assurance to the markets that everything continues as usual. What markets hate most is uncertainty, and at least today, one element of uncertainty has been removed.
While there are potential headwinds with looming central bank intervention, the overall macro trend for crypto clearly only knows one direction: up. The adoption of Web 3 and blockchain technology hasn’t even truly started on the big scale and because no one can perfectly time market cycles, it would be unreasonable to not be exposed in some way to the transformative crypto projects that will unquestionably change the world.
Consequently, if we are “blessed” with some macro “hiccups” and liquidity shocks, these dips will likely be the last generational buying opportunities to get into crypto…
It’s important to note however that opportunities will be abundant in the months to come and you don’t have to rush into every shiny project immediately. Patience and self-discipline, coupled with focused high-conviction bets are the way to go.
Polygon Partnering with Akash
In an effort to truly decentralize the infrastructure on which the Web 3 protocols of the future are built, Polygon is partnering with Akash Network to onboard thousands of Dapps to Akash’s distributed cloud hosting network.
Both Akash and Polygon are fundamentally very strong projects that are likely to play a significant role in the Web 3 world of the future.
Australia Bullish on Crypto?
Although we know that some of the most impactful crypto projects originated in Australia (including the likes of THORChain, Synthetix, and Illuvium), the country isn’t exactly known for its positive stance towards crypto. However, things seem to be shifting in “the land Down Under” with more and more political and financial players voicing their support for crypto.
American Banks Bullish on NFTs
Meanwhile, both Morgan Stanley and JP Morgan, have published bullish reports on NFTs. While this is a nice (but unnecessary) sign of legitimacy for NFTs, these banks are not exactly known for making accurate crypto predictions.
By creating marketplaces for illiquid assets such as digital art, collectibles, music, gaming and other assets, the NFT universe is surely set to continue to grow strongly over the coming years because it helps to solve the problem of injecting liquidity into naturally illiquid assets such as collectibles.