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Educating oneself about the crypto ecosystem is crucial for investors to pursue during a bear market while awaiting a bull cycle. That being said, having a good understanding of crypto investment entails keeping an eye out for fraudulent projects that threaten to drain assets overnight, a.k.a. pump-and-dump schemes.

Pump-and-dump in crypto is an orchestrated fraud that involves misleading investors into purchasing artificially inflated tokens — typically marketed and hyped by paying celebrities and social influencers. SafeMoon token is one of the most prominent examples of an alleged pump-and-dump scheme involving A-list celebrities, including Nick Carter, Soulja Boy, Lil Yachty and YouTubers Jake Paul and Ben Phillips.

Once the investors have purchased tokens at inflated prices, the people owning the biggest pile of tokens sell out, resulting in an immediate crash in the token’s prices. While fraudsters disguise pump-and-dump schemes under the pretext of creating the next batch of crypto millionaires, knowledgable investors have the upper hand in identifying and avoiding their involvement.

Pump-and-dump schemes are usually accompanied by false promises around three broad categories — solving real-world use cases, guaranteed exorbitant returns and unwithered backing from celebrities and influencers.

The long-term success of a cryptocurrency is heavily dependent on the use cases it serves. As a result, people supporting pump-and-dump projects often suffice their involvement by highlighting the use cases the token aims to serve. In addition, such schemes typically rope in celebrities by upfront payments in cash and the project’s in-house tokens. 

It’s weird to think that anyone could look forward to downturns in the crypto market, but that is precisely the position held by many developers and project creators who enjoy the low-pressure environment that exists during a bear market. 

As the saying goes, bear markets are for building, and now is one of the best times to survey the landscape to see which sectors of the market are most active in designing the platforms that will soar to new heights in the next bull cycle.

Here’s a look at five sectors of the blockchain ecosystem that may present some of the best opportunities for accumulation while prices are low and demand is non-existent.

Layer-1 protocols

Layer-1 (L1) protocols like Bitcoin and Ethereum form the foundation that much of the cryptocurrency ecosystem is built upon and enable most of the other sectors of the market to exist.

That being said, there are currently not many options available for launching other protocols on the Bitcoin network and Ethereum has well-known limitations in terms of scalability that can lead to high transaction costs and slow processing times.

The recovery in the cryptocurrency markets is being led by Bitcoin (BTC), which has risen above the $21,000 level. However, BlockTrends analyst Caue Oliveira said that on-chain data shows a decline in “whale activity” since the month of May, barring the flurry of activity during the Terra (LUNA) — since renamed Terra Classic (LUNC) — collapse.

A survey conducted in China shows that most participants believe that Bitcoin could fall much further. About 40% of the participants said they would buy Bitcoin if the price dropped to $10,000. Only 8% of the voters showed interest in buying Bitcoin if it drops to $18,000.

Millionaire investor Kevin O’Leary told Cointelegraph that crypto markets are likely to witness “massive volatility” and enter into a state of “total panic” before entering an accelerated growth phase. He said that companies run by “idiot managers” will face the heat, but that will result in the rise of stronger companies.

Could higher levels continue to witness aggressive selling by the bears? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin slipped below the support line of the symmetrical triangle on July 13, but the bears could not sustain the lower levels. This suggests that the bulls purchased the dip and have pushed the price to the 20-day exponential moving average (EMA) ($20,842).

At the moment, liquidity is hard to come by, but crypto traders and protocols still need inflow and revenue to remain functional.

As the crypto winter drags on, savvy crypto investors have realized that one of the reliable sources of passive income that still exists can be found on protocols that generate revenue and share some of it with their respective communities.

Let's take a look at some of the protocols that continue to thrive in the current down market.

DeFi might be dead, but platforms with revenue will thrive

Data from Token Terminal shows revenue positive platforms are primarily the nonfungible token (NFT) marketplaces like LooksRare and OpenSea.

Aside from a few select protocols including MetaMask, Decentral Games, Axie Infinity and Ethereum Name Service, the majority of the remaining protocols with the highest revenue are decentralized finance platforms, showing that while DeFi is down, it's not out of the game.

The latest Uniswap (UNI) chart pattern suggests that investors should be prepared for a correction after gaining nearly 20% over the past week.

A 45% UNI price crash ahead?

UNI's price has been trending upward since mid-June inside what appears to be a "rising wedge," which traditional analysts view as a bearish reversal pattern due to its history of luring bulls into buying fake-out bounces.

Therefore, rising wedges resolve after the price breaks below the lower trendline. Traders typically calculate a rising wedge's downside target by subtracting the distance between its upper and lower trendline from the breakdown point.

That puts UNI's downside target at $3.8 by September 2022, down 45% from July 15's price if the breakdown begins near $6.52. However, the target would shift upward to $4.65 if the breakdown originates at the apex, i.e., where the wedge's trendlines converge, resulting in a drop of 32.25% from July 15's price

Interestingly, a rising wedge also formed between February and April. The pattern snapped a 65% upside move, with a broader 70% price slump that took UNI's value to $3.56 per unit from around $12.50.

The price of Aave (AAVE) has more than doubled in a month, but its bullish momentum could be reaching a point of exhaustion.

AAVE price tests key inflection level

Notably, AAVE has surged by over 103% after bottoming out locally at $45.60 on June 18, hitting almost $95.50 this July 15. Nevertheless, the token's sharp upside retracement move has brought its price closer to the level that triggered equally sharp pullbacks since early June.

In other words, AAVE has been testing an ascending trendline resistance that constitutes a "bear flag," a bearish continuation pattern. For example, the trendline's previous test on July 9 ended up in a 20% downside move. Similarly, a similar attempt on June 24 pushed AAVE price lower by nearly 30%.

As a result of this distribution behavior, AAVE's ongoing attempt to break above the flag trendline could meet with extreme selling pressure. A pullback could then see AAVE/USD retest the flag's lower trendline near $67.75 as its downside target by September, down almost 30% from today's price. 

Meanwhile, the $76.30-level serves as interim support, primarily due to its history as a price floor in May that preceded a 60% rebound move.

The cryptocurrency market has grown beyond many people’s expectations over the past decade. The nascent industry has managed to change mainstream perception quite significantly, especially in 2021, which saw many traditional financial institutions adopt crypto in one form or another.

Some of the biggest public companies such as MicroStrategy started using Bitcoin (BTC) as a treasury hedge, while the likes of PayPal, Mastercard and Visa paved the way for the common public to use crypto as a form of payment. While many experts are still skeptical about the use of crypto as a form of payment, given its price volatility, recent market trends and data indicate that crypto is increasingly being used to buy daily-use items.

A recent report from fintech payment infrastructure provider checkout.com that surveyed 33,000 business leaders revealed a rise in consumer interest in paying in crypto. The report indicated that 40% of 18–35-year-old consumers want and plan to use cryptocurrencies to pay for goods or services within the next year. That’s up from less than 30% last year.

The rise of digital payments aided by the COVID-19 pandemic has only made it easier for crypto to become more mainstream. People are more familiar with QR code payments today, which makes it easier for mainstream payment processors such as Visa and Mastercard to introduce crypto payments on its network without having to build a separate infrastructure.

Miles Paschini, CEO at fintech bank FV Bank, told Cointelegraph:

Proof-of-stake-based blockchain Celo has been suffering from an on-and-off network outage lasting 24 hours, though the blockchain appears to be up and running again now. 

Celo is an open-source blockchain that enables users with phone numbers to make payments with crypto by using their phone numbers as a proxy for public keys.

Celo updated its Twitter followers after the network came back online, noting it was the network’s first outage since the mainnet launch on April 22, 2020, and that it has begun a “thorough and expedited technical analysis” to get to the bottom of the issue.

The protocol made the initial announcement that the network had stalled on July 14 at 12:04 am (UTC) at block 14,035,019, assuring that “all funds are safe.”

It resumed around nine hours later for several minutes before pausing again at block 14,035,045.

Crypto investors found cause for celebration on July 14 as the market experienced a positive trading session just one day after the Consumer Price Index (CPI) posted a June print of 9.1%, its highest level since 1981. 

The move higher in the market wasn’t entirely unexpected for seasoned traders who have become familiar with a one to two-day bounce in asset prices following the most recent CPI prints. These traders also know there’s nothing to get too excited about as the bounces have typically been followed by more downside once people realize that the high inflation print is a negative development.

Nevertheless, the green in the market is a welcome sight after the rough start to 2022.

According to data from Cointelegraph Markets Pro and TradingView, the biggest gainers over the past 24-hours were Uniswap (UNI), Polygon (MATIC) and Aave (AAVE).

Robinhood lists UNI

Uniswap, the top decentralized exchange by volume, saw its token price head higher on July 13 after hitting a low of $5.23. The token has since climbed 36% to hit a daily high of $7.11 on July 14 amid a 104% spike in its 24-hour trading volume to $449 million.

Unlike bull markets where traders can basically throw a dart at a list of coins to pick one that will go up, bear markets require much more effort to find projects that could perform well over the long-run.

One project that has continued to show signs of mainstream adoption despite the onset of a crypto winter is Polygon (MATIC), a layer-two scaling solution for the Ethereum (ETH) network that is looking to build a sustainable Web3 infrastructure on the top smart contract platform.

Data from Cointelegraph Markets Pro and TradingView shows that since hitting a low of $0.316 on June 18 during the worst of the crypto market sell-off, MATIC has climbed 118% to $0.70 where the price now sits at a major support and resistance level that first appeared in March 2021.

Three reasons why the long-term outlook for Polygon remains positive include its continued adoption by mainstream entities, the migration of multiple projects to the Polygon network and an increase in the platforms offering liquid staking services for MATIC.

Major adoption announcements

Adoption by influential mainstream companies is one of the best forms of marketing that a blockchain platform can receive as it exposes them to a large pool of potential users.

In the fourth episode of Market Talks we welcome YouTube media creator and crypto educator Crypto Wendy O

Crypto Wendy O is a YouTube Media Creator and Crypto Educator. Wendy became interested in Cryptocurrency and Blockchain technology in November of 2017. She has been into crypto full time since summer of 2018 and focuses on providing transparent marketing & media solutions for blockchain companies globally. Wendy also provides free education via YouTube and Twitter to her growing audience of over 170K. Oh and she is also the largest female crypto influencer in the world.

Some of the topics up for discussion with Wendy are, the new consumer price index (CPI) numbers and how they might impact the crypto market going forward and why there is so much uncertainty in the market right now?

As everyone tries to figure out where the Bitcoin (BTC) bottom might lie, we ask Wendy what her opinion on the matter is where she think the bottom might be. We also discuss whether Ethereum (ETH) has out performed BTC during this current bear market and what that might mean for the second largest cryptocurrency.

With more and more crypto platforms filing for bankruptcy, we discuss how much longer the crypto contagion will continue for and what is the best way to safeguard your assets so you don't lose your hard earned money. Are hardware wallets a better option rather than keeping your crypto on online exchanges?

Polygon (MATIC) reached lofty price levels this July 14, a day after getting selected for the Walt Disney Company's benchmark business development program.

MATIC's price surged 22.5% to $0.657 a token, its highest level in a month. In doing so, the token also climbed above its 50-day exponential moving average (50-day EMA; the red wave), a curvy resistance level that had been capping MATIC's upside attempts since January 2022.

Polygon enters the Disney World

MATIC's move upside appeared synchronous with similar intraday recovery actions witnessed elsewhere in the crypto market.

Nonetheless, Polygon fared better than most of its top-ranking rivals, including the cryptocurrencies Bitcoin (BTC) and Ether (ETH).

And at the core of MATIC's better performance could be the Walt Disney Company.

Bitcoin (BTC) found a new focus just under $20,000 on July 14 as U.S. dollar strength hammered out yet another two-decade high.

DXY moves bring yen, euro into focus

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD rebounding from lows sparked by a fresh 40-year high for U.S. inflation as per the Consumer Price Index (CPI).

After briefly dipping under $19,000, the pair took a flight above $20,000 before consolidating immediately below that psychologically significant level.

For on-chain analytics resource Material Indicators, it was now "do or die" for BTC price action when it came to a key rising trendline in place since mid-June.

On the day, that trendline stood at around $19,600, with BTC/USD now preserving it as support.

Major European cryptocurrency investment firm CoinShares is expanding its exchange-traded products (ETP) with a new physically-backed ETP based on Algorand (ALGO).

CoinShares on Thursday announced the listing of its physically-backed staked Algorand ETP on Xetra, the electronic trading platform run by Germany’s exchange operator Deutsche Boerse.

Named the CoinShares Physical Staked Algorand, the new crypto investment product will be trading on Xetra under the ticker RAND. The ETP is enabled through CoinShares’ proprietary technology platform Galata, allowing investors to benefit from the 2% staking rewards associated with participating in Algorand's blockchain security.

The new Algorand ETP joins a family of CoinShares’s staked ETP offerings featuring blockchain networks and cryptocurrencies like Polkadot (DOT), Tezos (XTZ), Cardano (ADA), Solana (SOL), Cosmos (ATOM) and Polygon (MATIC).

Created in 2017, Algorand is a decentralized network and infrastructure aiming to enable an improved version of a Proof-of-Stake (PoS) blockchain, referred to as the pure PoS (PPoS). In contrast to many PoS networks, any network member can become a validator with the minimum stake required of 0.1 ALGO ($0.03).

The United States Consumer Price Index soared to 9.1% in June, exceeding expectations of an 8.8% rise year-on-year. Currently, the Fed funds futures point to an 81 basis points rate hike for July, suggesting that some participants anticipate a 100 basis points hike.

Several on-chain indicators have been pointing to a likely bottom in Bitcoin (BTC) but the analysts from market intelligence firm Glassnode are not convinced that the low has been made. In “The Week On-Chain” report on July 11, the analysts said that the market may have to fall further “to fully test investor resolve, and enable the market to establish a resilient bottom.”

While the short term remains bearish, strategists are confident about its long-term prospects. CoinShares chief strategy officer Meltem Demirors said on CNBC that Bitcoin may extend its “downward correction” in the near term but it is likely to make a new all-time high “in the next 24 months.”

What are the important levels on Bitcoin and the major altcoins that could arrest the decline? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin dropped back to the support line of the symmetrical triangle on July 12, indicating that the break above the triangle on July 7 may have been a bull trap.

There is an old saying, “cash is king,” but if it is sitting in a bank account or, in the case of crypto — a wallet, it diminishes daily due to inflation. This is especially the case now as inflation in the United States breaks its 40-year record. While the dollar-cost-averaging (DCA) strategy allows an investor to minimize the effects of volatility by purchasing an unstable asset in time intervals, inflation still causes a decrease in a target asset’s value over time. 

For instance, Solana (SOL) has a pre-set protocol inflation rate of 8%, and if the yield is not generated through farming or utilizing decentralized finance (DeFi), one’s holdings are depreciating at a rate of 8% per year.

However, despite the U.S. Dollar Index (DXY) increasing by 17.3% in a year, as of July 13, 2022, the hopes of receiving significant returns in the bull market are still pushing investors to engage with volatile assets.

In the upcoming “Blockchain Adoption and Use Cases: Finding Solutions in Surprising Ways” report, Cointelegraph Research will dig deeper into different solutions that will help to resist inflation in the bear market.

Download and purchase reports on the Cointelegraph Research Terminal.