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In our last report, it was stated that the $40.7 to $42k range was an important area to reclaim for the Bitcoin price to push higher in the short term.
In early February, this area was indeed reclaimed, and Bitcoin’s price increased to just below the $45,4k level. After about two weeks of sideways action, the sudden invasion of Russia in Ukraine unsettled the markets. Bitcoin immediately corrected more than 10% and nosedived to $34.5k.
With the war situation still evolving and the uncertainties remaining, Bitcoin saw a week of high volatility. Despite this unstable situation, some people kept calling for a bullish reversal, since gold, the VIX, and the dollar peaked, Bitcoin seemed oversold and the crypto sentiment across the board was at extreme bearish levels.
Just on the last day of the month, Bitcoin rallied $2,600 in only 100 minutes in a short squeeze. At the time of writing, the mother of all cryptocurrencies consolidates around $38k.
As it stands, Bitcoin has managed to decouple from the correlation to Nasdaq, a reality that was dominating the last few weeks. While there remains a short-time risk due to the current uncertain macro situation, Bitcoin has been looking strong in the last few days. The cryptocurrency printed a clear double bottom, which can be interpreted as a sign of strength.
In regard to the current technical levels, $33k remains the level to be held or else further downside would have to be expected. On the way up, the area around $45.6k is a huge resistance level. Should Bitcoin successfully clear this level, a move to $52k should be imminent.
As for other cryptocurrencies, it is important to note: The current environment is driven by Bitcoin. Ethereum and altcoins in general have lost their previous trendline and are currently running flat. Once a resumption of the bull market is confirmed, alternative cryptocurrencies with good fundamentals will most likely continue their upwards trajectory.
With the current macro uncertainties, market predictions have become even harder. If the bottom is truly in for Bitcoin, building a longer base typically leads to a stronger upward impulse. Concretely speaking, a Bitcoin pullback to the $38k to $42k region could happen and would be perfectly healthy. Whether or not this will happen in the coming days, Bitcoin will most certainly launch another attempt at taking out the resistance level at around $45.6k in the weeks to come. A breakthrough might also depend on the Federal Reserve and its immediate actions.
Back in January, the market was pretty sure about rate hikes coming in March. With the Ukraine/Russia war situation, the probability of seeing significant interest rate raises is deemed to be much lower now.
Should all of this be seen as early signs of another bull cycle, this cycle’s narrative has already been found: It would be Bitcoin becoming the unofficial, uncensored, politically neutral world reserve currency for all.
Metaverse investments
The Metaverse is the next internet – at least that is what Metaverse enthusiasts keep proclaiming. According to their vision, our digital lives are on the verge of shifting from Web 2.0 applications like Google, Instagram, YouTube, and WhatsApp to the Metaverse. This shift will be the internet’s next development stage leading to a more interactive and decentralized web, dominated by 3D virtual worlds and blockchain technology.
History of Internet
To better understand the importance of this shift, we are taking a quick look at the history of the internet. The original World Wide Web, Web 1.0, was developed in 1989 and experienced exponential growth during the nineties. Its rapid growth and the hype it caused triggered the Dotcom bubble and its later bust. Up to this point, Web 1.0 has been a one-way street, mainly allowing users to retrieve information from servers (read). In the 2000s, Web 2.0 platforms started to emerge. This new type of websites allowed users to actively contribute content to a webpage – whether it be comments, uploading pictures and videos, or even running their own content page (read-write). Web 3.0, which we are on the edge of entering, allows users to own and monetize their digital data and content (read-write-own), thanks to blockchain technology. This will change the power dynamics of the internet, as the large Web 2.0 platforms, which currently make most of their profits from monetizing users’ data and attention, will have to find new revenue streams and business models to stay relevant.
Many of the large internet companies have already started pivoting towards Web 3.0. The frontrunner was Meta (Facebook), which even changed the name to show its dedication to the Metaverse.Other companies like Microsoft, Unity, Valve and Epic Games among many others are following suit with large investments in R&D towards Metaverse-focused products.
The real Action is happening in Crypto
But the real progress is made somewhere else. Countless crypto projects are developing their own version of the Metaverse in a truly decentralized Web 3.0 manner. Two of the most advanced projects are Decentraland and The Sandbox. Both of these virtual 3D worlds are already up and running and can be visited via any web browser. And these projects are no joke. Some digital real estate plots within these virtual worlds are already changing hands for millions of dollars and several well-known brands like Gucci, PricewaterhouseCoopers, and Adidas have invested serious money to purchase virtual real estate. Solvent investors believing in the future of these Metaverse projects can purchase land plots on the respective marketplaces with a few clicks. But don’t be fooled. Even the cheapest plots are traded for several thousand dollars.
MANA and SAND
An easier way to invest in these Metaverse projects is by buying their in-world token. MANA (Decentraland) and SAND (The Sandbox) are used for all economic transactions within these
Metaverses. The larger these virtual worlds become, the greater the demand for the respective tokens will be, which will lead to a potential increase in their value. Decentraland and The Sandbox are the leading Metaverse projects in the crypto space and have already developed massive in-world economies. Thanks to digital real-estate investments of several well-known brands, they have made headlines far beyond the crypto world. But the big breakthrough and mass adoption lies still ahead of them, which makes them
interesting investment opportunities at their current development stage.
Overall take-home message: While markets are currently struggling to price the pervasive uncertainty in future events, Bitcoin and cryptocurrencies have reached the early stage of a value area that can be
considered a good buy zone for long-term holders. This also goes for projects in the Metaverse space. If you are interested in gaining exposure to this upcoming virtual world, contact your PTGR financial adviser.
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