Mizuki Capital

Market Analysis – Project’s That’ll Remain Relevant

The cryptocurrency market is at the turning point after the latest market trend reversal. While a portion of the crypto community calls for a quick market recovery, an equal number of market analysts announce the prolonged bearish period. Regardless of which group’s claims will prove to be correct, at times like these, it is important to switch the focus towards the long-term possibilities. Therefore, our in-house analysts prepared the market analysis which marks projects that have prerequisites to remain relevant during and after the inevitable bearish market period.

Why Are We Here (The Technical Market Analysis)?

The first thing to concentrate on is why has the market plummeted so much with Bitcoin (BTC) sliding down almost 50%? We know that some retail investors tend to lay blame on Elon Musk and his Tweets for BTC slipping from $65000 to the current $39,000. However, reasons for this correction can also be found outside of the conspiracy theories.

Since the majority of cryptocurrencies still follow Bitcoin’s price movement, we did a quick technical analysis of the BTC/USD Coinbase weekly chart.

Market Analysis - Bitcoin
Source: Coinalyze.net

The screenshot above clearly shows that Bitcoin has slowly been building the RSI divergence since the first major rally in January. During the last 5 months, regardless of the growth, each peak of BTC price was followed by less buying strength according to the RSI indicator. Naturally, bulls lost the momentum and the big sell-off session became inevitable.

Nevertheless, there are still a few signals that might spur the next wave of optimism. The price of Bitcoin still managed to barely remain above the MA 50 line in the same weekly chart, finding support in the area of around $30,000. Additionally, both Buy/Sell Volume and Buy/Sell Count indicators remain positive (visible in the chart below). This means that, despite the short-term trend reversal, there is still new money being invested in Bitcoin. Logically, where there’s an influx of new money, there still is a possibility of recovery.

Buy/Sell Analysis
Source: Coinalyze.net

The Crypto Start-Up Innovation Progression

Regardless of a possible market recovery, it will be interesting to see what happens with hordes of projects that emerged during the last year. As is always the case with such young and galloping markets like cryptocurrencies, each extremely positive period brings new kinds of players and ideas that take the market by storm.

The 2017 bull run brought a huge hype around privacy-oriented coins such as Monero or Verge. Additionally, and more importantly, the market slowly started to abandon Proof-of-Work (PoW) consensus reaching mechanism to replace it with a more scalable Proof-of-Stake (PoS). With the new technology emerged staking as its byproduct. Thus, investors charged in to acquire some NEO, DASH, or EOS to stake or to set up a masternode to earn some passive income on their coins.

The (ongoing) 2021 bull run introduced another crypto innovation summed up under the name DeFi (Decentralized Finance). While the new crypto trend is too broad to thoroughly explain in such a short written form, let’s use the following definition.

DeFi is referred to as financial applications built on blockchain technologies, typically using smart contracts.

-Hedera.com

Keep in mind that the first platform which introduced smart contracts was Ethereum. Therefore, it remained the pivotal part of the new crypto DeFi hype. DeFi also introduced some new expressions that crypto enthusiasts had to master, like Yield Farming and Liquidity Mining. While these are somewhat different than raw staking, investors still need to hold their coins to receive rewards. However, in DeFi it is advisable not to keep them in place but move funds around to maximize profits instead, and that became the foundation of current market ongoings.

Crypto Start-Ups in Bull Run Aftermaths

During the mentioned 2017 bull run, we have witnessed the race between the likes of Ethereum, EOS, NEO, Tron, and similar projects for the number one smart contract-based platform. All mentioned projects simply skyrocketed in value during the investment frenzy. However, despite the scalability issues, Ethereum emerged as a sovereign among the pack and holds primacy with the majority of new DeFi projects.

One example of what happens to highly hyped-up projects in the bull run aftermath is EOS. Once labeled “the Ethereum killer”, EOS failed to reach its ATH this year. The same happened to NEO and TRON, with both still below their respective 2017 highs. This means that Ethereum emerged as a winner and investors who went with its competitors didn’t score such gains as if they stuck with the first mover.

Therefore, we can draw a nice parallel between crypto and .com investment hype back in the 90s. While many internet search engines were competing for supremacy back in the day, Google defeated the competitors. Since nobody uses e.g. Altavista anymore, it slowly disappeared into oblivion. The same can be expected to happen in the cryptocurrency market.

Who’s To Remain Standing After 2021?

In the meantime, we have more than a few important new players in the crypto market of today. Binance Coin (BNB) already made a name for itself with its direct Ethereum tech competitor Binance Smart Chain (BSC) solving the ETH scalability problem. In this instance, the crypto trading giant Binance perfectly exploited the opportunity of Ethereum 2.0 being chronically late and provided its solution for the DeFi space that took over a big chunk of the market share.

DeFi innovation also familiarized us with various kinds of decentralized swaps that made crypto trading much easier than with big centralized exchanges and their order books. Thus, now we know all about the competition between Uniswap, Pancake Swap, and other similar service providers. The difference between these is that they support asset exchanges on a single blockchain. In usual circumstances, the winner would be the one whose preferred blockchain takes the market supremacy, which is currently Ethereum. That distribution of power in the “swap niche” is best demonstrated by Uniswap’s position in the market according to the market capitalization. 

However, this time around, we have cross-chain platforms and aggregators quickly penetrating the market.

One such example is Polkadot (DOT). Polkadot is an “open-source sharding multichain protocol that facilitates the cross-chain transfer of any data or asset types, not just tokens, thereby making a wide range of blockchains interoperable with each other.” As such, the project simply took the crypto market by storm, currently sitting at the 9th spot with a formidable market capitalization of slightly above $21 billion. Naturally, DOT has a gigantic potential and will probably remain highly relevant in a post-bull run period, if not for years to come.

CoinMarketCap Screenshot
Source: CoinMarketCap.com

Another interesting competition that’s only just heating up is in the liquidity aggregation field. The likes of Orion, Reef, Finxflo, and others, while offering slightly different services, all aim for the same market share. Therefore, whichever comes out on top will potentially bring huge gains for its early investors in the long run.

These are only some of the ongoing rivalries in this fast-evolving crypto market, with numerous smaller ones that’ll shape the market of tomorrow. While some projects might appear to have the same potential, it is always advisable to research the people behind the venture and other fundamental cornerstones. The distinction between two similar products is often only in marketing or even tokenomics. Therefore, thoroughly researching the niche and its players may just provide that correct idea of who is going to come away with winning the game of cryptos.


Disclaimer:

All investment strategies and investments involve the risk of loss. Nothing contained in this market analysis should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.