Need for Fresh Catalysts

Bitcoin ($BTC) is struggling to stay above the crucial $30k mark as market exploits, and network stability issues continue to haunt the crypto industry. 

There are a few key factors that are leading the market sentiment. First is the failure of the Biden administration to push for regulatory clarity for the crypto industry. Secondly, the Federal Reserve’s (FED) decision to reduce its balance sheet will negatively impact the equities market. 

If the Fed is not careful with this delicate balancing process, it may lead to a similar consequence to the 2013 tapering exercise that threw the financial market into disarray. This time, the US is facing other equally concerning issues such as rising living costs, geopolitical tension in Eastern Europe, and the supply chain crisis. 

The crypto market needs fresh catalysts to turn the market around. These catalysts must be impactful to spur investors’ interest. One such possibility is the launch of Bitcoin spot Exchange Traded Funds (ETFs).  

Long-term holders can start accumulation as the risk of further downside is limited. The best strategy to adopt is the dollar-cost averaging (DCA) method.   

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Weekly Recap

• Binance continues its rapid regulatory expansion.
• Binance to host revelation summit for a mid-year update.
• Cronaswap announces major protocol upgrades. 
• Community-developed GameFi across Lunacia is now open for testing. 
• Binance finally releases Luna 2.0 airdrop after complaints. 
• Binance Labs closes $500 million investment funds. 
• SecondLive’s avatar editing tool allows users to create and earn. 
• CZ arrives in Malaysia and addresses a range of issues.  
• Mad Meerkat nears an all-time low. 
• Most Valuable Builder (MVP) is back for the fifth installment.  
• Former product manager in OpenSea charged with insider trading. 
• Binance.US aims for license in all 50 states by the end of this year. 

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Market Sentiment

Sentiment has not improved from last week. The US economy looks bleak as the Fed is set on reducing its balance sheet. In addition, the crypto market is still reeling from the Terra Luna’s meltdown after-effects. 

There is fear that regulators will start clamping down on stablecoins or use the $LUNA-$UST Fiasco as a reason to impose stricter regulations. Japan was the first to respond after its parliament passed a bill into law to regulate stablecoins. 

Inhibitory laws do not augur well for the crypto space. It stifles innovation. The current regulatory framework that deals with digital assets and securities is enough to preserve market integrity.  

This market cycle presents one of the best opportunities to buy. This time around, the crypto market is more robust and has more value propositions as an emerging asset class. 

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Coins to Watch

• Optimism ($OP) - Optimism is a layer-2 chain that serves as one of the solutions to the congestion on the Ethereum mainnet. 
• Optimism is the second-largest layer-2 on Ethereum and will benefit from the liquidity that it can unlock from the Ethereum ecosystem. 
• Optimism recently rolled out its native crypto and reached a high of $2.10 in a bearish market. 
• Optimism has a lot of potentials and $OP at $1.35 at the time of writing is a worthwhile investment. 

• Ethereum ($ETH) - Ethereum is still the dominant smart contract platform. 
• Other layer-1 solutions such as Solana ($SOL) and Avalance ($AVAX) are faster and cheaper but have their own problems. 
• Ethereum dipped below the $2k price and, at the time of writing, is around $1,800. Ethereum, after the merge, will reduce its inflation drastically, increasing scarcity that will provide upward pressure on its price. 
• BitMex’s former Chief Executive Officer (CEO) is still bullish on Ethereum and does not rule out that Ethereum might reach the $10,000 mark by the end of the year. 

• Solana ($SOL) is one of the most widely used layer-1 solutions. It has an active and vibrant ecosystem that is growing.
• Solana has been adversely affected by constant outages, and the most recent one has shaken investors’ confidence. 
• Reliance and stability are some of the main problems plaguing the Solana network.  

• Independent analyst Miles Deutscher believes that Solana’s future growth and its network effect make the asset a worthwhile investment. 

• Solana’s future success is dependent on how the network can eradicate the downtime and restore its investors’ confidence.  

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

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