Dear valuable clients,
We aim to present you on a monthly basis some key insights which might be helpful for you.
Market Updates
1) What happened last month?
Crypto markets got off to a rough start in 2022. With bitcoin’s price continuously falling over the course of this month and hitting a local bottom at around $33k on January 24, the entire crypto market got dragged down. The second-largest cryptocurrency by market capitalization, ether, tanked from $3,257 to $2,219 (-31%) in just four days, while many top 100 coins corrected more than 50%.
This recent dip was caused by a change in the current macroeconomic landscape. With inflation numbers spiking higher, the US central bank was forced to flex its muscles by signaling upcoming interest rate hikes and balance sheet normalization. This has instilled uncertainty across all markets. High-risk assets such as tech stocks as well as crypto assets have taken a hit.
2) Where do we stand?
It looks like equities have bottomed, at least in the short term. With the dollar topping out and equity indices like S&P 500 or Nasdaq reversing their course, Bitcoin has also stabilized within the trading range of 30k to 40k, roughly speaking. While some already point to a bullish reversal that yet needs confirmation though, others see Bitcoin’s price ranging until the area around $40.7 to $42k is reclaimed.
Considering the current range, we cannot rule out a scenario where Bitcoin tests the $30k level. Back in the summer of last year, this level acted as major support. If we were to go this low, it would be interesting to see, whether Bitcoin whales will step in again as they did earlier this January at $33k. It’s not unlikely that some whales currently exploit the current situation, opening short positions at the upper end of the range (between $38k to $40k) while buying spot at the lower end of the range (between $33k to $30k).
3) Outlook: What could happen?
From a short-term perspective, we are currently in a no-trade zone, indicating that the market could go anywhere. In such an environment, a trader should position himself neutrally. Concretely speaking this means that at the respective support levels stop-losses should be placed in case they break, while buy orders could be set, in case the market breaks out to the upside.
If Bitcoin were to keep on ranging, strong layer 1 solutions like Solana, Avalanche, or Near could outperform Bitcoin. However, a move to $30k from Bitcoin would surely affect the entire crypto market once again, with the imminent result that any gains that altcoins could have secured during a time of Bitcoin’s ranging would be lost again. At the moment BTC touches the $42k range and if it moves up towards 52k, the consolidation phase will convert into the expected bull-market. So far we still have a way to go and it also might be that there will be some more stronger DIPs in front of us.
With the first interest rate hike schedules for March, the question is: Will the crypto market go even lower in the short- to mid-term? Obviously, no one knows. What could be possible: Announcing rate hikes crashes the markets. Once the rate hikes are implemented though, the crypto markets have already priced them in, which is why the probability of a further price massacre happening is lower, even though the current pessimistic market sentiment would lead us to expect otherwise.
A new tactical coin – an Ethereum scalability solution
Ethereum is known for its chronical high fees caused by the congestion of the network. It has fallen victim to its success. To solve Ethereum’s scalability issue, many layer 2 solutions have been built over the last two years. Polygon, Arbitrum, Optimism, and Metis are just a few of the many projects that have set out to scale Ethereum transactions throughput.
Our tactical coin is another layer 2 project that aims to scale Ethereum and has recently caught our attention. It not only follows a new technical approach by using ‘Rollups’ but also has no native token yet. This means that the project has not only some technical advantages over its competitors (of course there are always trade-offs) but also that early users could benefit from a potential airdrop. And indeed, team members from this new project have indicated that the project will launch a community-owned token sometime in the future. Sounds promising.
What are Rollups?
Rollups are a scaling solution that bundle and compress transactions off-chain. These bundles then get verified at the consensus layer. This ultimately allows multiple transactions to be “aggregated” into a single on-chain transaction. The result of verifying multiple transactions simultaneously is increased efficiency. At the same time, the number of possible transactions that can be executed multiplies, which results in increased scalability. Thanks to rollups, Ethereum can scale from what used to be 15-30 transactions per second (tps) to 3000+ tps – without compromising on security.
If you are interested in this tactical coin, please contact us this or next week.
PTGR is now PTGR AG
As of 8th February 2022, we converted in an AG based in CHF 6300 Zug. Our main office remains in Pfäffikon SZ.
Next Webinar
Our next get-to-know Webinar is 23th February 2022, 8pm. If you have persons who are interested, they can dial in via the following link: https://zoom.us/meeting/register/tJ0qdeitrz0sHdIrsxXtrqRgHPcbbKw9ccda
Thank you for your support and have a lovely and successful month ahead.
Your PTGR AG TEAM
