It has been a slightly bizarre week for the cryptocurrency market so far… with the only large-cap cryptocurrency that is positive on a rolling 7-day period being Dogecoin (DOGE) thanks to speculation about Elon Musk possibly looking to incorporate DOGE functionality for ecommerce on Twitter.
Anyone watching Bitcoin (BTC) knew going into this week that the coin needed to hold above $45,000 support or risk selling off to lower support, and that is exactly what happened.
Currently holding support around the $42,500 area, BTC could very easily retest lower support around its 50-day moving average at $41,700 if not even lower at the psychological $40,000 level. Underlying momentum continues to improve along with price which is trading in an ascending channel, however, the 10/50 Real Motion indicator is currently showing a bearish phase after breaking below its 50-day moving average.
Real Motion is not quite oversold just yet, another signal that there may be more sell-side pressure on Bitcoin in the immediate future. If cryptocurrencies bounce from here, the next resistance level to beat is back to $44,500 which would then set up for a possible retest of $48,000.
Thanks to the announcement that Strike will be integrating the Bitcoin Lightning Network with Shopify and payment firms Blackhawk and NCR, it looks like very soon you will be able to actually spend your BTC at retailers across the US. Even if the short-term outlook for Bitcoin looks slightly bleak, this news from Strike is one of if not the most bullish signals for the cryptocurrency industry that we’ve seen all year.
Collaboration Amongst Major DeFi Coin’s is Worth Keeping an Eye On
The outlier amongst large-cap coins this week was AVAX, which recovered about +5.5% on Thursday with the rest of the market roughly flat. It was announced on Thursday morning that the companies behind AVAX and LUNA would complete a $200 million token swap. This is the beginning of a partnership between two of the 4 largest DeFi cryptocurrency projects, and one that honestly just makes sense when you consider the altcoin market as it currently stands.
Solana (SOL), Terra (LUNA), and Avalanche (AVAX) are all relatively close in terms of their respective project's value, all of which have a market cap between $20-40 billion. However, when compared to the nearly $400 billion market cap of Ethereum (ETH) it goes to show that there is still plenty of room for growth amongst these large-cap DeFi’s. Depending on the scale and future objectives of the AVAX/LUNA partnership, they very likely could give ETH a run for its money by collaborating rather than trying to go it alone.
The most obvious purpose for the AVAX/LUNA token swap is that Terra (LUNA) is looking to support their UST stablecoin by backing it with a diversified bag of liquid assets that also includes Bitcoin. This is just the most recent move by Terra to make the news, as they have already acquired $1.5 billion of BTC and continue to accumulate more each day.
We get the feeling that 2022 will see one of the 3 DeFi’s mentioned above breakout to a level at which it could compete with Ethereum, and this news is encouraging especially for LUNA as it shows that the project is willing to play nice with others in the space in order to mutually benefit.
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