Last week I gave a trade idea on XAUUSD with a target around the $2,020 price line. At the time of writing, XAUUSD already exceeded the target and I’m sure that would leave a lot of people wondering what to expect next. Below, I have presented my view of how I expect the price action to turn out in the meantime.
Last chance for bulls to exit the market. FBS explains the next two years for crypto
2022-11-22 • Updated
Crash of LUNA ecosystem and halving cycles. Glimpse into the future of the crypto market with FBS experts!
LUNA crash is the boost for crypto
You probably heard about the crash of the LUNA coin. It’s one of the biggest crashes in crypto history. In April 2022, LUNA had a market capitalization of $40 billion. Now it’s less than $1 billion. Another member of the LUNA ecosystem, the UST stablecoin pegged to the USD, lost its peg and fell from $1 to $0.01.
This terrifying crash has been discussed earlier, and we won’t bother you with that. Instead, we better focus on the future. Earlier, there were two crushing incidents in crypto history.
In 2014, cryptocurrency exchange Mt. Gox was exploited, and 850 000 Bitcoins were stolen. This created a trend in protection mechanisms for crypto. Later, Coinbase and Kraken exchanges were created. Both are now the biggest exchanges with flawless protection mechanisms.
In 2017, the ICO (initial coin offering) bubble burst, and millions of investors lost their money. ICO was tied up on centralized exchanges. People started to look for other ways of storing their funds. That led to the creation and rise of the decentralized finance (DeFi) sector. Now, DeFi has a $63 billion market capitalization.
Something extraordinary should happen to create something truly unique in the crypto market. LUNA crash may be an awful and crushing experience for the market, but also it can be the start of a new trend. For example, new protection mechanisms, more advanced algorithms of collateralization, or the dawn of stablecoins. At least part of them. Notice that FBS supports USDT, the biggest stablecoin with a long track record. Even during the LUNA crash, USDT mainly remained pegged to the USD, although traders extracted $8 billion. That means a lot to the stability of a coin.
Bitcoin halving cycles importance
Crypto cyclicity started with halving. As you probably know, the reward for mining a block is split in half every four years. What was a 50 BTC reward in 2010 became a 6.25 BTC in 2020. In 2024, the reward will reduce to 3.125, making it even harder for miners to be profitable.
Historically, the halving cycle has comprised a two-year sideways movement ahead of the event, followed by a year-long meteoric run and a 12-month bear market. It has been so for the whole life of Bitcoin. On the figure below you can see each Bitcoin halving.
However, the cycles are becoming less each time due to increasing market capitalization of the crypto market (it’s now harder to push the price higher) and decreasing miners’ influence. Also, this bull cycle took form of a double top pattern, faking the market and pretending to be two bull runs instead of one. Despite this, we assume the cycles will continue to work, not because of miners and halving algorithms but due to the mass adoption that comes to crypto. More institutional investors use Bitcoin as a way to diversify their portfolios. Countries are working on a legislative regulation for crypto; some even started to use Bitcoin as the main currency.
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Crypto whales (the power-holders of the cryptocurrency market who can have a large amount of crypto) are stepping it up. Companies like Coinbase, Binance, and Gemini use their crypto accounts to manipulate the market. And just like with other financial markets, they will move crypto up and down for another year or two, collecting liquidity for another massive bull run. Halving of 2024 will press on miners, forcing them into selling crypto to stay afloat. That’s where the next rally will start.
To sum up, the crypto market has a lot to lose now. The next halving will be in 2024, so we have plenty of time to prepare. The following year in crypto will surely be bearish. There will be ups, but the trend is looking down, so there is a plenty of time for sellers to enjoy. The trend is your friend and with the information given above you probably know what to do. Stay tuned and trade with FBS!
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Bearish Scenario: Selling below 22.65 with TP1: 22.34 (intraday) and TP2: 22.02 (swing). Bullish Scenario: Buying above 22.70 with TP1: 22.90.
Intraday and swing scenarios based on price action and volume profile.