Decentral Block Post

The current crypto bear market has induced panic, fear and uncertainty in investors. The dire situation started when the global crypto market capitalization dropped below the $2 trillion mark in January 2022. Since then, the price of Bitcoin (BTC) has decreased by over 70% from its all time-high of $69,044.77 it reached on November 10, 2021. Similarly, the values of other major cryptocurrencies such as Ethereum (ETH), Solana (SOL), Avalanche (AVAX), and Dogecoin (DOGE) have decreased by around 90%. 

So does history tell us anything about when the bear market will end? Let’s start by examining the causes of the 2022 bear market.

Catalysts of the 2022 bear market

There are several factors that caused the current bear run.

First off, the build up to the bear market started in 2021. During this period many regulatory authorities threatened to introduce stringent laws governing cryptocurrencies. This created fear and uncertainty in the market. For example, the U.S. Securities and Exchange Commission (SEC) issued a lawsuit against Ripple. China banned bitcoin mining resulting in most BTC miners to relocate to other countries.

A global increase in inflation and rising interest rates instilled fear and uncertainty in the market resulting in lower crypto investment than expected. Although there is much publicity pertaining to the United States inflation and interest rate, other countries such as India have experienced similar challenges.

The take-off of digital gold has the potential to disrupt the industry to an unprecedented degree. Historically, gold has been used as a global currency as a hedge against inflation. It has also been serving as an investment venue (commodities), often preferred over other asset classes like equities or foreign exchange, particularly in conventional markets. 

However, there are certain disadvantages to owning physical gold, such as inconvenience in transport and storage, as well as the risk of theft. Gold exchange-traded funds (ETFs) might come across as an alternative option, but it cannot be forgotten that the traders don’t actually own the gold while paying the same taxes as gold bullion, or gold bars, and also investors have to pay an annual fee of around 0.4% to 1%. Gold contains all forms of metal, like coins and bars, whereas bullion includes all the exchangeable physical forms of other precious metals, like silver and platinum.

In contrast, digitized gold stored on blockchain comes across as a robust option. This is what Comtech Gold (CGO) comes in, combining the benefits of gold with the advantages of blockchain. CGO solves the prevailing problems in gold trading by rolling out a 100% gold-backed cryptocurrency.

CGO caters to the needs of individuals as well as corporate investors. It eliminates the need for retail investors to visit local markets to buy gold. Moreover, it makes things better for institutional investors by setting aside any need to store gold in physical form. 

Introduction to Comtech Gold

Comtech Gold has added another dimension to gold trading by issuing standardized digital gold backed by 100% physical gold. Built on XinFin XDC Network, an advanced blockchain, the project is also Shariah-compliant and certified by one of the renowned Shariah scholars group in the United Arab Emirates.

The lack of a decisive catalyst and the strength in the United States Dollar Index (DXY) has kept the recovery of risky assets under check. Bitcoin (BTC) remains stuck inside a tight range, searching for that elusive breakout. The longer the time Bitcoin spends inside the range, the greater will be the eventual breakout from it.

The short-term uncertainty in cryptocurrencies does not seem to have altered the long-term view of institutional investors. BNY Mellon CEO Robin Vince said that a survey commissioned by the bank showed that 91% of institutional investors were keen to invest in some type of tokenized assets in the next few years.

Although some believe that institutions have been slow to move into crypto, Coinbase senior adviser John D’Agostino thinks otherwise. While speaking in an interview with SALT, D’Agostino said that “institutional inertia is a very real thing” but in the case of digital assets, institutional adoption has been “moving very, very fast.”

What are the important support levels the bulls need to defend to avoid a collapse in Bitcoin and select altcoins? Let’s study the charts of the top 10 cryptocurrencies to find out.

BTC/USDT

The bears successfully defended the 50-day simple moving average (SMA) ($19,659) on Oct. 17 and 18. The failure to clear this hurdle may have tempted the aggressive bulls to book profits and the bears to initiate short positions. That pulled the price back below the 20-day exponential moving average ( ($19,384) on Oct. 18.

The past eighty days have been moderately bearish for cryptocurrencies as the altcoin market capitalization declined by 16%. The downside movement can be partially explained by the U.S. Federal Reserve’s quantitative tightening, rising interest rates and the halting of asset purchases. Although they are aimed at curbing inflationary pressure, the policy also increases borrowing costs for consumers and businesses.

Solana's (SOL) downfall has been even more brutal, with the altcoin facing a 29% correction since August. The smart contract network focuses on low fees and speed, but the frequent outages highlight a centralization issue.

The latest setback occurred on Sept. 30 after a misconfigured validator halted the blockchain transactions. A duplicate node instance caused the network to fork, as the remaining nodes could not agree on the correct chain version.

Recently, Solana's co-founder Anatoly Yakovenko placed his bets on Firedancer, a scaling solution developed by Jump Crypto in partnership with the Solana Foundation. Dubbed the long-term fix to the network outage problem, the mechanism should be ready for testing in the coming months.

On Oct. 11, Solana-based decentralized finance exchange Mango Markets was hit with an exploit of over $115 million. The attacker successfully manipulated the value of MNGO native token collateral, taking out "massive loans" from Mango's treasury.

Cardano (ADA) price is in the process of painting its seventh red monthly candle in a row as the token fell to its lowest level since February 2021.

The trend saw ADA's price rising nearly 800% to $3.16 between February 2021 and September 2021, followed by a complete wipeout of those gains entering October 2022. Amusingly, the entire price action took the shape of the "Burj Khalifa," the world's tallest skyscraper in Dubai.

ADA price eyes 35% price crash

The ADA price correction began primarily in the wake of a similar downtrend across the cryptocurrency market, led by the Federal Reserve's aggressive interest rate hikes to tame rising inflation.

Even an optimistic Cardano network upgrade dubbed Vasil was not enough to bring its buyers back to the market.

Notably, ADA's price has dropped by nearly 20% since the Vasil hard fork nearly a month ago — an update aimed at improving its network's scalability and smart contract capabilities.

The price of Quant Network (QNT) eyes a sharp reversal after an impressive 450% rally in the past four months.

QNT's downside outlook takes cues from a flurry of technical and on-chain indicators, all suggesting that investors who backed its price rally have likely reached the point of exhaustion.

Here are three reasons why it could be happening.

Quant's daily active addresses drop

Interestingly, the period of QNT's massive uptrend coincided with similar upticks in its number of daily active addresses (DAA). This metric represents the number of unique addresses active on the network as a sender or receiver.

As of Oct. 17, the Quant Network's DAA reached an all-time high of 10,949, up from around 5,850 four months ago, data from Santiment shows. Its upsurge during the QNT price uptrend shows traders were net buyers.

Ripple users may be able to interact with Ethereum-compatible decentralized applications (DApps) in the future following the launch of a test phase of Ripple’s new XRP Ledger sidechain.

The launch of the sidechain was shared in a Tweet by blockchain development firm Peersyst Technologies on Oct. 17, noting that the new sidechain is compatible with Ethereum Virtual Machine (EVM).

This means that Ripple users could eventually have access to decentralized applications like Uniswap (should it port over) and Web3 wallets such as Metamask and XUMM Wallet.

The new sidechain also comes with a cross-chain bridge built to transfer XRP and other assets between the EVM-supported sidechain and the XRP Ledger Devnet.

According to RippleX software engineer Mayukha Vadari, the release “means developers no longer have to choose between XRPL or EVM-compatible blockchains.”

The United States equities markets have made a bullish start to the new week. The S&P 500 is up about 2.60% and the Nasdaq Composite has rallied more than 3%. This indicates that the markets have shrugged off September's high inflation reading and shifted focus onto the third-quarter earnings.

The stock market’s recovery could pave the way for Bitcoin (BTC) to break out of the range it has been stuck in for the past several days. A positive sign for the bulls is that the amount of Bitcoin held in cold storage or lost has risen to a five-year high, according to Glassnode data.

While long-term investors do not seem to be in the mood to sell their holdings at lower levels, smaller investors appear to be making the most of the depressed prices. Glassnode data shows that the number of wallets holding one whole Bitcoin or more has risen sharply in 2022.

What are the levels to watch on the upside that could signal the start of a sustained recovery in Bitcoin and altcoins? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin broke above the 20-day exponential moving average ($19,410) on Oct. 17 and the bulls are trying to extend the recovery above the zone between the 50-day simple moving average ($19,691) and the downtrend line.

Ether (ETH) price has been unable to close above $1,400 for the past 29 days and it has been trading in a relatively tight $150 range. At the moment, the $1,250 support and the $1,400 resistance seem difficult to break, but two months ago, Ether was trading at $2,000. The current price range for Ether simply reflects how volatile cryptocurrencies can be.

From one side, investors are calm as Ether trades 50% above the $880 intraday low on June 18. However, the price is still down 65% year-to-date despite the most exciting upgrade in the network's sev-year history.

More importantly, Ethereum's biggest rival, BNB Chain , suffered a cross-chain security exploit on Oct. 6. The $568 million exploit caused BNB Chain to temporarily suspend all transactions on the network, which holds $5.4 billion in smart contracts deposits.

Ether underperformed competing smart contracts like BNB, Cardano (ADA), and Solana (SOL) by 14% since September, even though its TVL in ETH terms increased by 9% during the period. This suggests that the Ethereum network's issues, such as the $3 average transaction fees, weighed on the ETH price.

Traders should look at Ether's derivatives markets data to understand how whales and market makers are positioned.

The S&P 500 and the Nasdaq Composite fell to a new year-to-date low last week and closed the week with a loss of 1.55% and 3.11% respectively.

The scenario changed drastically on Oct. 17 after earnings season ramps up and a sharp policy reversal from UK finance minister Jeremy Hunt added detail to the government's plan to fix his predecessor's (Kwasi Kwarteng) fiscal package which triggered a record fall in the value of the GBP and a near liquidation of pension plans in the United Kingdom.

At the time of writing, the Dow is up 1.78%, while the S&P 500 and Nasdaq present 2.57% and 3.26% respective gains. Meanwhile, Bitcoin (BTC) has managed to stay well above its year-to-date low showing short-term outperformance.

Some analysts expect that Bitcoin could be closer to a bottom. Twitter trader Alan said that the stochastic indicator on Bitcoin’s monthly chart has reached levels similar to that seen during the 2014 and 2018 bear markets, indicating a likely macro bottom.

Similarly, LookIntoBitcoin creator Philip Swift said in an interview with Cointelegraph that Bitcoin could be close to major cycle lows. Citing various metrics, Swift said that Bitcoin may face another two to three months of pain but should start its outperformance in 2023.

XRP XRP has made considerable gains over the past month as traders continue to shower confidence on Ripple's legal win against the U.S. Securities and Exchange Commission (SEC).

For instance, XRP price has gained 25% thirty days after Ripple and the SEC filed for an immediate ruling on whether or not XRP sales violated U.S. securities laws. In comparison, Bitcoin BTC and Ether ETH are down 4% and 11% over the same period, respectively.

Now, a flurry of indicators, ranging from on-chain to technical, hints XRP can continue its uptrend going into 2023.

XRP price "bull pennant"

Bull pennants are bullish continuation patterns that form as the price consolidates in a triangle-like range after a strong upside move. In other words, they resolve after the price breaks out in the direction of its previous uptrend. 

On the daily chart, XRP has been trending inside a similar technical structure since late September, as shown below. While at it, the token has also attempted to break above the pennant twice, albeit to no success. It now eyes another breakout in the coming days.

This week, Bitcoin’s (BTC) price took a tumble as a hotter-than-expected consumer price index (CPI) report showed high inflation remains a persistent challenge despite a wave of interest rate hikes from the United States Federal Reserve. Interestingly, the market’s negative reaction to a high CPI print seemed priced in by investors, and BTC’s and Ether’s (ETH) prices reclaimed all of their intraday losses to close the day in the black. 

A quick look at Bitcoin’s market structure shows that even with the post-CPI print drop, the price continues to trade in the same price range it has been in for the past 122 days. Adding to this dynamic, Cointelegraph market analyst Ray Salmond reported on a unique situation where Bitcoin’s futures open interest is at a record high, while its volatility is also near record lows.

These factors, along with other indicators, have historically preceded explosive price movements, but history will also show that predicting the direction of these moves is nearly impossible.

So, aside from multiple metrics hinting that a decisive price move is brewing, Bitcoin is still doing more of the same thing it’s done for the past 4.5 months. With that being the case, it is perhaps time to start looking elsewhere for emerging trends and possible opportunities.

Here are a few data points that I’ve continued to be intrigued by.

The United States consumer price index (CPI) increased 8.2% annually in September, beating economists’ expectations of an 8.1% rise. The CPI print lived up to its hype and caused a sharp, but short-term increase in volatile risk assets. 

The S&P 500 oscillated inside its widest trading range since 2020 and Bitcoin (BTC) also witnessed a large intraday range of more than $1,323 on Oct. 13. However, Bitcoin still could not shake out of the $18,125 to $20,500 range it has been stuck in for the past several days.

Both the U.S. equities markets and Bitcoin tried to extend their recovery on Oct. 14 but the higher levels attracted selling, indicating that the bears have not yet given up.

Could the increased volatility culminate with a breakout to the upside or will it start the next leg of the downtrend?

Let’s study the charts of the S&P 500 index, the U.S. dollar index (DXY) and the major cryptocurrencies to find out.

Huobi Token (HT) has been up 12% in the last 24 hours and is one of the few cryptocurrencies bucking the general downtrend.

Trading at over $7, HT's price is up over 80% since the beginning of this week, which is also its best weekly performance since February 2021.

HT's intraday gains coincide primarily with crypto exchange Huobi Global announcing the opening of Starfish Finance (SEAN) spot trading on its platform. 

Plans to "empower" HT

Additionally, HT's impressive weekly gains were related to About Capital Management. On Oct. 8, this Hong Kong-based investment firm announced purchasing Huobi Global, one of the leading cryptocurrency exchanges by volume.

HT serves as a utility token inside the Huobi Global ecosystem. Justin Sun, the founder of the Tron blockchain project and reportedly the core backer of About Capital, said on Oct. 10 that they would empower HT to boost Huobi Global's brand and business endeavors.