Q4 2021 RCAA summup
Dear Valued Investors and Friends,
2021 was a good year for the overall crypto market, although it certainly saw its fair share of volatility. Specifically, the last quarter did not fall short of expectations and delivered on the bullish predictions most anticipated, though the top was reached already in November rather than December, which was to be expected. Entering 2022, we assume to see even bigger volatility in the markets, but still with a bullish outlook.
The first half of 2021 belonged to DeFi projects, and the second half was a battle amongst different L1 blockchains. Notably Solana, Luna, and Avalanche are now all in the top 15 coins by total market capitalization, and quality projects that didn’t gain these valuations, will likely see a spike throughout this year.
Looking at the last year as a whole, with the exception of meme tokens (DOGE, SHIB), most value goes to projects with strong fundamentals. Most projects simply built on hype have disappeared from the top ranks. Lot of these projects were rightfully replaced by competing L1 blockchains and tokens tying into these ecosystems.
Starting October, or Uptober rather, most coins soared with Bitcoin in the lead as it touched its new ATH of $67,000 for the very first time. Interestingly, Shiba Inu coin (SHIB) entered the top 10 list of the largest coins by market capitalization for the first time.
In a similar fashion, November ended up being the month when both BTC and ETH reached their all-time highs, with BTC hitting USD 69,000 and ETH reaching close to USD 4,870. However, October to November were also the months when the meme coin craze ended (for now), with DOGE and SHIB down by approx. 70% and 60%, respectively, from their ATH.
Contrary to what we saw at the end of 2017, the month of December saw mostly lower prices for major cryptocurrencies, with BTC and ETH both down by close to 20% for the month. The end of the quarter failed to meet many of the bullish price predictions for the value of BTC for the end of year.
New to many, we have seen a lot more gaming & metaverse projects and tokens gain traction throughout the last quarter. This was largely driven by the boom in the NFT space and companies like Decentraland and Sandbox.
Overall market structure
When it comes to the current market structure it is important for Bitcoin and Ethereum to hold their respective support levels at $40K and $3K. In case the prices drop below these support levels, we may be looking at a larger correction and even longer cycle, but it could also be the beginning of a bear market. We also see that the hypothesis of lengthening market cycles is likely correct, as the 4-year December ATH expectations weren’t fulfilled.
We are closely monitoring the markets and changing our positions between major currencies and stablecoins. Currently, we have a sizable allocation in L1 blockchains with set stop losses in case the supports of BTC and ETH will not hold. The aim of the strategy for this year is to protect the gains in case the markets are not performing well and ride the wave up if they do.