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Digital Assets in the Web3 Bear Market: Why Utility Matters

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Digital Assets In The Web3 Bear Market: Why Utility Matters

With price tags in the millions of dollars and their viral followings, non-fungible tokens have risen into the mainstream consciousness over the past couple of years. However, the current market for NFTs, which use blockchain technology to create unique versions of digital art, sports memorabilia, photographs and so on, is not nearly as hot as it once was. With the crypto industry now in a bear market, investors are scurrying away from these notoriously volatile assets, sending the price of NFTs and other digital assets down, down, down. 

Just like in the real world economy, crypto markets are cyclical. Indeed, digital assets have a reputation for their unprecedented volatility, with prices soaring up into the stratosphere one month and crashing back down to earth in a blazing fireball the next. 

Such highs and lows can be almost unbearable for investors who’re simply looking for a quick profit, but there are many in the digital asset industry who welcome them. For those who believe in the promise of the blockchain, the lows are helpful in weeding out those projects that offer little value and are built only on hype, paving the way for those with genuine use cases to gain more traction. 

Determining the value and likely longevity of any digital asset project therefore comes down to one thing. Does it have utility or not? Does it do anything useful? 

There is a good reason why companies like Amazon and Google survived the dot com bust and emerged as multi-billion dollar technology powerhouse. They provide genuine use cases for their customers, who’re only too happy to pay for that utility. Amazon was the company that revolutionized online shopping and door-to-door deliveries, while Google is the organization that puts the world’s information at our fingertips. They’re both incredibly useful. 

Determining Digital Utility 

When it comes to digital assets, people therefore need to think about its actual utility. What does that product do, and would people be willing to pay for it? If the answer is no, then it has very little utility and is most likely building on the hype factor alone. 

Unfortunately the digital asset market is full of hyped up projects that are actually standing on very wobbly foundations. One of the problems with identifying such projects, though, is that determining utility in the crypto world is trickier compared to other industries. 

Blockchain aims to become the world’s most dominant technology, powering a whole bunch of different real-world activities. Proponents of the tech say it will be transformational and revolutionize everything from financial services to property ownership to collectibles to gaming. But blockchain isn’t there yet, and there’s no guarantee it ever will achieve this destiny. In that case, when assessing the utility of any digital asset it’s poignant to ask, what usefulness does this token/project actually bring to people’s lives?  

It can be helpful to look at some examples of assets that are genuinely useful. Bitcoin, for example, offers utility as a store of value. It has millions of enthusiastic supporters who invest in it in the same way people buy gold, in the belief it can maintain its value, if not appreciate and get them rich. Bitcoin hasn’t quite yet achieved the stability of gold, but many people believe that it can do so one day, and if we look back at its history, it has always appreciated over the long term. So its real world use case is quite apparent –  it’s a store of value and a long-term investment that many believe will ultimately pay off. 

We can also highlight digital assets that lacked utility. A prescient example is Terra’s UST. This was designed to be a stablecoin asset that was unique from others such as USD Tether and USD Coin. The difference was that, rather than being an asset-backed coin (where the issuer holds an equivalent amount of real world assets to back the number of digital coins in circulation 1:1), it was an algorithmic stablecoin that was linked to a second cryptocurrency – Terra’s LUNA token. The way it worked was that LUNA would be burned to mint new UST that was brought into circulation. The idea was that traders could take advantage of the opportunity in arbitrage trading to keep the price of UST stable, pegged 1:1 with the U.S. dollar. It was an interesting concept no doubt, but there was never any real answer to the question, why use UST in the first place? 

The algorithmic mechanism it employed was a clever concept but that didn’t really matter to the average crypto investors. After all, there were numerous other stablecoins that did exactly the same job – USDT, USDC, BUSD – that did exactly the same job, only with a more proven way of establishing trust. So why should an investor sell their USDC to buy UST? 

The main reason UST became so popular was because of its linked DeFi protocol Anchor, which paid an incredible 20% APY to those who staked the token. It was this that powered UST’s meteoric rise, but it ultimately proved to be unsustainable. Really, the ultimate cause of Terra’s collapse was not some institutional attack as many have claimed, it was the simple lack of utility.

Terra and UST’s death spiral was painful for those who were invested in the project but the lessons learned from that disaster may well be beneficial for the digital asset space going forward. The next time someone creates a stablecoin, it won’t be enough to just explain how it works. The creators will also need to explain how it is different from other stablecoins out there, and show people why they actually need a new stablecoin. 

Similarly, it seems unlikely anyone will just be able to cook up a new layer 1 blockchain or DeFi protocol without addressing questions around its utility. Already, there are dozens of promising layer 1 blockchains, and hundreds of interesting DeFi protocols. Do we really need more? The creators will need to convince people why we do. 

Projects that fail to answer these questions and instead look to generate growth through hype alone will almost certainly come a cropper when market conditions deteriorate and investor’s enthusiasm dries up.  Another good, failed example is Celsius Finance, a DeFi protocol that recently became insolvent. During last year’s bull market everything was rosey as Celsius had a constant influx of new money from investors who were attracted to the high rewards its staking platform offered. But when the market went into decline, those new funds quickly dried up, and it soon became clear that Celsius had overextended itself, with disastrous results for its users. 

Useful Digital Assets

On the other hand, projects that focus on creating solutions to real-world problems, or those that build on the value of existing concepts, should have a bright future no matter what happens to the wider crypto market economy. 

Developers are catching onto this. Today, we see numerous NFT projects emerging in the digital asset space that go beyond gimmicky, digital collectibles that provide no real value other than bragging rights. An intriguing concept is Royal, which allows people to invest in upcoming musicians by purchasing an NFT that gives them the rights to a share of a song’s royalties. If the song proves to be the next Hotel California, those royalties will grow and the value of that NFT could increase exponentially, providing generous payouts to its holder years into the future. 

Another interesting use case for digital assets is to link them to the multi-billion dollar sports industry. Take Autograph, a startup backed by former NFL legend Tom Brady that has hit upon the idea of tokenizing autographs, not only from sports stars but also from other celebrities such as singers, actors and so on. 

With Autograph, celebs can mint limited-edition collections of NFT-based autographs and bestow rights to those tokens. For example, the holder can get access to the star in question through Autograph’s private Discord channel, giving fans a chance to interact with their favorite stars. These interactions could even take place in person. Golf legend Tiger Woods recently announced that NFT autograph holders could compete for the chance to play a round of golf with him in person. 

The idea of digitizing sports collectibles has merit. After all, sports memorabilia has grown to become a multi-million dollar industry in its own right. It’s an industry that caters to the demand from sports fans for keepsakes, souvenirs and other tokens of remembrance that have a direct connection to a famous football match or athlete. Such possessions are highly prized by enthusiastic fans. By collecting them, fans gain a direct connection to historic games and the wonderful memories they evoke, long after those moments have passed. While most fans will wear a replica of their team’s shirt to show their support, the hardcore collector won’t be satisifed unless that shirt has actually been worn – and signed – by Diego Maradona himself. 

Items such as a pair of boxing gloves worn by Muhammad Ali, Barry Bond’s 756th homerun ball, or an autographed David Beckham shirt can have significant value due to their rarity and historical significance. What’s more, they rarely lose their value either – in fact, sometimes they can even gain value at a time when the economy is down on its knees. 

This idea of sports memorabilia and collectibles with real-world utility carries over to the emerging world of Web3 with startups like Fanzee, which is building an NFT-powered fan engagement platform that allows sports teams to provide gamified experiences. With it, teams can create their own, branded digital ecosystems through which they can engage with fans, rewarding them with digital assets for completing challenges such as quizzes, games and puzzles. 

For instance, a soccer team can ask fans to create and share a video clip of their top ten goals of the season, and provide NFT rewards that offer real-world utility. This could include tickets to an upcoming match, or a chance for fans to meet their favorite players in real life. The central idea is that Fanzee enables teams to interact with their fans on a daily basis – not just once a week when a game is played – and reward them for their loyalty. 

Another project that’s merging sports with digital assets is LinksDAO, a decentralized autonomous organization that aims to sell NFTs to finance the purchase of a physical golf club and course. The LinksDAO NFTs function as membership cards and are available in two tiers – Leisure and Global. The Leisure NFTs are more affordable and provide benefits such as discounts for tee times, authentic merchandise and golf packages. Holders also get the right to vote on community governance issues. As for the Global NFTs, these are more exclusive, offering the same perks plus other benefits like membership for family members and access to official golf trips with other Global NFT holders, 

Sports is just one of many examples of how digital assets can provide utility in the real world, and it’s far from the only one. The fact is that NFTs can be incredibly versatile and provide multiple unique, and extremely compelling benefits to the people who own them. 

For emerging crypto projects, the blueprint for success is therefore pretty simple. They need to come up with a way to leverage their digital assets to solve real world problems, fulfill a demand, or cater to people’s enthusiasm in a way that existing solutions cannot. By putting utility at the forefront, NFT-based projects can do a lot more than just survive the crypto market crash. They can achieve true longevity by becoming essential keepsakes whose value only increases with age.

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Ethereum Indicators Suggest ETH at Potentially Significant Turning Point

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Ethereum

Ethereum is slowly moving lower below $1,900 against the US Dollar. ETH must stay above $1,850 to avoid more losses in the near term.

  • Ethereum started a downside correction below the $1,920 level.
  • The price is now trading below $1,920 and the 100 hourly simple moving average.
  • There is a key declining channel forming with resistance near $1,900 on the hourly chart of ETH/USD (data feed via Kraken).
  • The pair could continue to decline if it stays below $1,900 and $1,950.

Ethereum Price Faces Resistance

Ethereum started a downside correction from well above the $2,000 resistance zone. ETH slowly moved lower below the $1,950 and $1,920 levels.

There was a clear move below the $1,900 level and the 100 hourly simple moving average. Ether price traded as low as $1,854 and remained stable above the $1,850 support zone. It is now consolidating losses above the $1,860 level.

An immediate resistance on the upside is near the $1,900 level and the 100 hourly simple moving average. It is near the 23.6% Fib retracement level of the recent drop from the $2,030 swing high to $1,854 low. There is also a key declining channel forming with resistance near $1,900 on the hourly chart of ETH/USD.

The first major resistance is near the $1,920 and $1,925 levels. The key breakout zone is forming near the $1,950 level or the 50% Fib retracement level of the recent drop from the $2,030 swing high to $1,854 low.

Source: ETHUSD on TradingView.com

A clear move above the $1,950 resistance could start a steady increase to $2,000. If there are more upsides, the price may perhaps gain bullish momentum and test the $2,080 resistance zone in the near term.

More Losses in ETH?

If ethereum fails to rise above the $1,925 resistance, it could continue to move down. An initial support on the downside is near the $1,860 zone.

The next major support is near $1,850, below which there is a risk of a sharp decline. In the stated case, ether price may perhaps decline towards the $1,810 level. If the bears remain in action, the price could even drop towards the $1,750 level.

Technical Indicators

Hourly MACDThe MACD for ETH/USD is now losing momentum in the bearish zone.

Hourly RSIThe RSI for ETH/USD is now above the 50 level.

Major Support Level – $1,850

Major Resistance Level – $1,925

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XRP Price Could Rise If It Clears This Price Barrier

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Xrp Price

XRP Price has witnessed consolidation between the $0.30 and $0.37 mark for a considerable number of trading sessions. Over the last 24 hours, the altcoin has managed to hover around the same price mark without losing its market value. In the past week, XRP price has lost 2% of its value.

Lateral trading had caused buying strength of the coin to be be affected. For the bulls to take charge, it is important for XRP to break past its sideways trading. XRP had formed higher highs and higher lows at the end of July. The bulls don’t seem to be able to push past the $0.37 mark.

This could be pointed towards the lack of demand for XRP. The $0.37 mark has been a propelling point for the altcoin’s price, however, the bulls could not hold on to the momentum even then. With Bitcoin receding on its chart, many altcoins have also followed the same sentiment on their respective charts. Demand and broader market strength remain crucial for XRP.

XRP Price Analysis: Four Hour Chart

XRP was priced at $0.37 on the four hour chart | Source: XRPUSD on TradingView

The altcoin at the time of writing was trading for $0.37. XRP had witnessed sharp resistance at the $0.39 price ceiling. Incase XRP price manages to topple over the $0.39 level, there could be a possibility for a rally. Additional resistance mark for the coin was at $0.40.

The local support for XRP rested at $0.34. A fall below the $0.34 level will cause XRP to trade at $0.31. Amount of XRP traded over the last session had increased as the sellers were dominating the price action.

Technical Analysis

Xrp Price
XRP registered fall in buying strength on the four hour chart | Source: XRPUSD on TradingView

A continued sideways trading with XRP price oscillating between $0.30 and $0.37 has pushed buyers out of the market slowly. The technical indicator for the coin displayed that.

The Relative Strength Index was below the zero-line because sellers were more compared to buyers in the market. It was a sign of bearishness.

XRP price was pictured below the 20-SMA line which again is a sign of the bears resurfacing as the sellers were driving the price momentum in the market.

Xrp Price
XRP displayed sell signal on the four hour chart | Source: XRPUSD on TradingView

The fall in buying strength gave rise to sell signal for the altcoin at the time of writing. The indication of the sell signal meant that the bearishness was still prevailing. The Moving Average Convergence Divergence tells the price momentum with possibility of reversals.

MACD witnessed bearish crossover and formed the red histograms which are related to the sell signal. Bollinger Bands indicate the price volatility, thereby, pointing towards chance of price fluctuation. The bands became broader which meant that XRP price could witness upcoming price volatility.

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Bitcoin Price Topside Bias Vulnerable Unless It Surges Past $24.5K

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Bitcoin

Bitcoin is struggling below $24,500 against the US Dollar. BTC could continue to move down below the $23,650 and $23,500 support levels.

  • Bitcoin is slowly moving lower and trading well below the $25,000 level.
  • The price is now trading below the $24,200 level and the 100 hourly simple moving average.
  • There is a key bearish trend line forming with resistance near $24,020 on the hourly chart of the BTC/USD pair (data feed from Kraken).
  • The pair could extend losses below the $23,650 and $23,500 support levels in the near term.

Bitcoin Price Turns Red

Bitcoin price started a slow and steady decline from the $25,000 resistance zone. BTC declined below the $24,650 and $24,500 levels to move into a short-term bearish zone.

There was a break below the $24,000 level and the 100 hourly simple moving average. The price traded as low as $23,673 and is currently consolidating losses. On the upside, an immediate resistance is near the $24,000 level. It is near the 23.6% Fib retracement level of the recent drop from the $25,200 swing high to $23,673 low.

There is also a key bearish trend line forming with resistance near $24,020 on the hourly chart of the BTC/USD pair. The first major resistance on the upside sits near the $24,250 level and the 100 hourly simple moving average.

The next key resistance is near the $24,450 zone. It is near the 50% Fib retracement level of the recent drop from the $25,200 swing high to $23,673 low. A close above the $24,450 and $24,500 resistance levels might start another increase.

Source: BTCUSD on TradingView.com

In the stated case, the price may perhaps climb towards the $25,000 resistance. Any more gains might send the price towards the $25,800 level.

More Losses in BTC?

If bitcoin fails to clear the $24,450 resistance zone, it could continue to move down. An immediate support on the downside is near the $23,675 level.

The next major support now sits near the $23,450 level. A downside break and close below the $23,450 level might put a lot of pressure on the bulls. In the stated case, the price might decline towards the $22,750 level.

Technical indicators:

Hourly MACD – The MACD is now gaining pace in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now below the 50 level.

Major Support Levels – $23,650, followed by $23,500.

Major Resistance Levels – $24,020, $24,450 and $24,500.

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Bitcoin Poised For Recovery, Relief Summer still In Play?

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Bitcoin Poised For Recovery, Relief Summer Still In Play?

Bitcoin has been able to make a resurgence in recent weeks. The 25,000 USD barrier was recaptured by Bitcoin prices just two days ago, marking the first time since June 13th.

Bitcoin Poised For New Rally

In June, Bitcoin had its largest monthly decline since 2011, falling over 37.3% to a final value of $19,925. Since then, it has partially recovered its value and today saw its first test of $25,000.

Bitcoin continues to rule the charts despite being down 46.5% from its previous high, but its dominance has decreased to slightly under 40% as opposed to more than 50% a few months ago.

BTC/USD trades slightly below $24k. Source: TradingView

However, Bitcoin has been relatively peacefully fluctuating horizontally over the past two weeks between $22,500 and $24,500. At the same time, recent weeks have seen a significant recovery in both commodities prices and stock markets. As a result, the overall financial markets are experiencing the anticipated summer rally.

Since attitude had reached a severe panic state in the middle of June as a result of the financial markets’ steep, month-long decline, perception among participants has greatly improved during the course of the most recent rebound. This in and of itself is a well-known bear market pattern. However, it won’t be known whether and how the bears will return until around mid-September.

Over the previous four weeks, the Crypto Fear & Greed Index has made remarkable progress. The sentiment is still largely scared, though. Fear still permeates the cryptocurrency industry seven months after the devastating sell-off.

1660703779 954 Bitcoin Poised For Recovery Relief Summer Still In Play

Crypto Fear & Greed Index, as of August 11th, 2022. Source: Lookintobitcoin

The feeling of being defeated permeates the wider picture as well. There are several excellent contrarian opportunities in this setting.

Overall, there is still a contrarian buy signal due to the scared mindset.

Sharp declines in the financial markets would be extremely detrimental to retain the current administration in office given the midterm elections on November 8th in the US. As a result, only a slight decline in the financial markets in September would be more likely. The markets could then rise from those lows until the American election.

Since November 2021, the equity and cryptocurrency markets have been under intense pressure for months, but a broad rebound has now been going on for little over four weeks. The Nasdaq Composite, which is heavily weighted toward technology, has increased by over 20% from its low on June 16th as a result of this procedure, adding over $420 billion to its market value. This would imply that the bear market is officially over.

Related Reading: Bitcoin Price Trades A Little Over $24,000, Can It Target $27,000?

Featured image from Getty Images, chart from TradingView, and Lookintobitcoin
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Ethereum Price Rejected At The $2,000 Level, Will It Retrace To $1,700 Soon?

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Ethereum Price

Ethereum price has retraced over the past few days, in the last 24 hours the coin depreciated 2%. The current price action pointed towards consolidation. In the past trading sessions, ETH has retraced beneath the $1,900 price mark.

Continued consolidation for Ethereum has now pushed Ethereum price close to $1,800. In case the king altcoin is unable to break past the $1,800 level, it would be targeting the next support level for the coin.

Technical outlook had turned bearish as the coin was mainly consolidating causing a loss of value. Buying strength witnessed a fall on its chart which made ETH turn bearish at press time. If Ethereum needs to cross above the $1,900 price level, the buying strength needs to recover considerably on its chart.

The global cryptocurrency market cap today is $1.18 Trillion, with a 1.6% negative change in the last 24 hours. Market movers were also dipping on their respective charts, this had an effect on the coin’s overall price movement.

Ethereum Price Analysis: Four Hour Chart

Ethereum was priced at $1,880 on the four hour chart | Source: ETHUSD on TradingView

ETH was trading at $1,880 at the time of writing. The coin had witnessed rejection at the $2,000 price mark multiple times. At the moment Ethereum price witnessed a correction after it attempted to trade near the $2,000 price level.

Overhead resistance for the coin was at $1,900 and a jump beyond the mentioned price level will push ETH to touch the $2,000 mark.

Local support for the coin was at $1,700 but consistent lateral movement might end up pushing Ethereum price to $1,500.

Amount of Ethereum traded depicted an increase in selling pressure indicating that sellers were starting to drive control in the market.

Technical Analysis

Ethereum Price
Ethereum depicted low buying strength on the four hour chart | Source: ETHUSD on TradingView

The altcoin’s lateral trading had taken a toll on its buying strength. The indicator on the four hour chart reflected the same. The Relative Strength Index was under the half-line which indicated that buyers are lesser than sellers in the market.

This fall in buying strength could cause Ethereum price to revisit $1,745 where the altcoin might again witness demand. Ethereum price was above 20-SMA line and pointed towards buyers driving the price momentum in the market.

Ethereum Price
Ethereum pictured sell signal on the four hour chart | Source: ETHUSD on TradingView

ETH’s price movement has also indicated that the coin registered sell signal on its chart pointing towards bearishness.

The Moving Average Convergence Divergence underwent a bearish crossover and formed red histograms under the zero-line.

These formations are related to sell signal for Ethereum. Parabolic SAR which depicts the price direction of the coin was also negative.

The dotted lines of the indicator above the candlesticks indicated that the price direction of Ethereum was heading south proving that the bears were stronger than the bulls on the four hour chart.

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Polygon Seen Breaching $1 This Week – Can MATIC Start An Uptrend?

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Polygon

Polygon (MATIC) seems to have its vigor back with it potentially breaching $1 in the coming days.

  • Polygon price is seen to generate massive gains at 108%
  • MATIC price shoots close to a critical level that bulls are eyeing to test
  • Set your eye on this critical level to catch the uptrend

MATIC price is moving extremely bullish and could squeeze pushing the price above $1 setting the stage for a huge uptrend that could potentially double the coin’s price to $2.

With that being said, MATIC is set to make as much as 100% of gains in the next couple of months.

The token’s price open this week close to a key level as Sunday’s price rally allows the coin to hover close to the $1 range which is pivotal in the next trading sessions.

MATIC To Breach The $1 Mark?

The $1.1 mark is crucial once the bulls start to trade in that level or breach the 200-day SMA. Once that is broken, this will indicate the end of crypto winter and that the bulls can rally further toggling on a longer-term upswing.

For that to happen, MATIC price will have to breach above the 200-day SMA and swerve past a rejection spotted at a monthly resistance level of $1.14.

If the bulls manage to steer clear of that and end the week at a range above the key resistance of $1.14, then that would be the day.

They can can avoid and close the week above $1.14, then this signals a looming uptrend that is considered as a huge bearish event, especially with the Fed rate decision still a month away.

If they manage to play by the book then that would mean 108% in total gains.

Polygon Bears Pushing Back Price To $0.44

According to CoinMarketCap, MATIC is down by 1.40% or currently trading at $0.9525 as of this writing. And it seems now the bears are regaining traction.

With the elements in order, a rejection may be nearby and hint a next crypto winter cycle. The rejection is seen to be at $0.80 below the 55-day SMA.

Should bears regain power, MATIC price is at risk of losses at 55% and the price pushed back to $0.44.

MATIC was able to peak at $2.9 in December 2021. But, when the crypto winter starts rolling, MATIC was among the first ones to crash hard and has even lost as much as 88% or a plunge to $0.34.

When the crypto market kickstarts its recovery phase, MATIC soars by a whopping 200% in a matter of two months reaching $1.

The next critical price to target is now $2 which can happen if MATIC manages to jump over the resistance set at $1.35 and $1.8.

MATIC total market cap at $7.4 billion on the daily chart | Source: TradingView.com

Featured image from CoinCu News, chart from TradingView.com
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