ParamountDax Markets Overview: When is the right moment to invest?

Dear Users and Traders,

In this week last newsletter article, we wanted to do something different, something more informative regarding the markets and to talk about what happened with the Ethereum Merge and our personal thoughts about possible future price action of Bitcoin and Ethereum. Let’s start.

The Merge

The Ethereum Merge came and went, leaving investors to ponder what the next trending development in the market could look like. In a Twitter Space with Capriole Fund founder Charles Edwards, the analyst mentioned that excitement over the Ethereum Merge and its bullish price action had somewhat been holding up hope across the market. Now that the event has come and gone, the crypto market has been selling off, with Bitcoin’s (BTC) price trading below $20,000 and Ether’s (ETH) under $1,500.

Eventually, new narratives and market trends will emerge, and if the fundamentals are right, traders will rotate funds as these new leaders emerge.

Let’s take a look at a few potential trends.

Where will the former ETH miners go?

The Ethereum network successfully shifted to a proof-of-stake (PoS) model, meaning miners are out of pocket but still possibly in possession of their GPUs and ASICs mining infrastructure. It’s possible that some miners might elect to mine on a different chain instead of selling their gear.

While they haven’t settled on any particular chain just yet, Ethereum Classic seem to be one the frontrunners. Leading into the Merge, the network saw its hash rate rise to new all-time highs.

Buy the rumor and sell the news, or buy the dip?

While ETH’s current price action is less bullish than Merge supporters and ETH bulls might have hoped, the actual shift to PoS appears to have been a success, and perhaps over time, the benefits of PoS will translate to bullish price action from ETH. According to Jarvis Labs co-founder Ben Lilly, the “Joe Cool move” for ETH investors is not to “get caught up in the days to come. The main player that is likely to do any sort of crazy activity is that of the miner. And that’s a one-off event that is to be short-lived.”

The explanation of the “Joe Cool move” is the following: “The Joe Cool move is to sit there and buy any type of overly emotional movement. Then sit back and take it easy.”

In the future, Ether could experience a supply shock and possibly become deflationary. Staking further secures the network while also providing guaranteed returns on deposited assets. In a market that is stuck in a downtrend, sourcing a safe predictable yield could become more attractive.

What about Bitcoin?

In these last few weeks, Bitcoin’s price has not really moved or changed. Its price has remained range-bound in the $17,600–$24,400 range for the past three months, and all rallies out of each range-high since March 29 have been capped by the 200-day moving average and an overhead resistance trendline that extends from Bitcoin’s November 2021 all-time high at $69,400.

While continued consolidation within the current range could (and would typically) be good for altcoins, macro tensions may continue to weigh on crypto and equities markets. The hot consumer price index print from Sept. 12 could lead to more aggressive rate hikes from the United States Federal Reserve, and the potential knock-on effect on stock prices could have an even sharper spillover effect on crypto prices.

For this reason, investors remain largely risk-averse to most cryptocurrencies, and it is possible that repeat rejections at the long-term descending trendline and further retests of the $19,000 support could eventually result in a breakdown below the yearly swing low.

Ending Thoughts

After all this personal thoughts, and none financial advice given, we think now or very soon smart investors, big or small, they started/will start to buy BTC/ETH and very possibly also some altcoins with good investment potential.

There is no one in the world that can catch the infamous “bottom”, so smart investors start to buy usually using the technique called DCA, or “Dollar Cost Average”, where one buys a set amount of cryptocurrencies with the same amount in €/$ every a set period of time (one time per day/week/month for example) so they will average down if the prices continues to correct or they will be in profits when the markets will turn bullish again after a complete reversal. This is also a simple buy and hold strategy, without any daytrading involved.

The markets and economy is in a bad shape, but if history can teach us something useful here, is that at the end of every dark tunnel there is light, you just need to be there to see it as one of the first.

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We hope that you liked this different than usual articles, se you all next week with the next articles!

Best Wishes,

The ParamountDax Team