Key long-term indicators and catalysts for crypto in 2022

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This week we dive into the uncertainty crypto markets have been facing. We discuss both sides of the argument, with strong points to be made from bulls and bears alike. We cover positive and negative catalysts for 2022 as well as important trends to keep an eye on.

Weekly Fees — Sum of total fees spent to use a particular blockchain in a week. This tracks the willingness to spend and demand to use Bitcoin or Ether.

Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges over the past seven days. Crypto going into exchanges may signal selling pressure, while withdrawals potentially point to accumulation.

After crashing by double digits in early January, crypto markets are attempting a rebound. The recent price action has several crypto traders perplexed as many believe the bull market will continue shortly while others fear the bear market is here to send their portfolios into deeper losses or liquidate their positions.

The mix between hope and distress has crypto markets split about what may come next. By diving into key indicators from a long-term perspective, we examine the merits of the bullish and bearish scenarios.

Holders Continue to Grow — The number of addresses holding BTC continues to grow, unlike January of 2018.

On-Chain Activity Endures — The number of transactions taking place on Ethereum remains near its highs.

Different dynamics — Crypto has evolved since 2017 and in Ethereum’s case it introduced a major change to the way it handles its supply

While the mechanics behind Ethereum’s supply burn is complex, one of the most simple indicators also bring positive news. Both Bitcoin’s and Ether’s price have recorded higher lows and higher highs, which was not the case in January 2018.

Positive catalysts for 2022 — Price aside, there are several reasons to remain bullish crypto this year:

2022 started with palpable strength from sellers. Much of this backdrop has come in light of a more hawkish federal reserve. For those unfamiliar with macro lingo, this essentially means that the central bank is likely to increase interest rates more or faster than initially anticipated, and potentially even decrease the monetary supply through quantitative tightening.

While Bitcoin’s price managed to continue growing in 2017 despite three rate hikes, it stumbled in 2018 as the fed introduced quantitative tightening. This is reflected in the money supply (M1) decreasing briefly early in 2018 before proceeding to grow at a slower rate.

Quantitative tightening explained — To fight rising inflation of 7% in the U.S. the federal reserve is discussing “balance sheet normalization” referring to quantitative tightening (QT). What does this mean:

The fed’s 180 turn — Following the covid lockdowns, the federal reserve reintroduced QE in 2021 at a bigger scale, now it is reversing its path.

Potential negative catalysts for 2022 — aside from the federal reserve, there are a few other potential bearish catalysts:

Overall, the macro environment signals risks to be considered by investors. While there are still reasons to believe in crypto’s continued growth in 2022, there is a considerable amount of uncertainty. Ultimately, these market forces are likely to play out in the upcoming months as the market gets more clarity from the federal reserve and activity from NFTs, gaming and DAOs seek to propel crypto to new highs.

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Derivatives markets in crypto continue to grow in popularity, outpacing trading volumes in spot exchanges. This has created opportunities for traders and investors alike along with a new set of tools to assess the state of crypto markets.

In this webinar we will dive into the numbers behind derivatives markets in crypto both in centralized and decentralized venues. Similarly, we will uncover opportunities in each of these markets that can benefit traders and builders alike.

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