After a big year for cryptocurrencies in 2021, many are wondering what 2022 has in-store, and today we’re giving you a taste by looking at cryptos top stories for the week ahead.
Dogecoin to the Moon?
Last year was big year for Dogecoin. On 1 January, 2021, a single Dogecoin could be bought for less than one cent. That changed in early-2021, when comments by Tesla founder, Elon Musk, sent the price of Dogecoin rocketing to 90 cents (AUD). Since that high, Dogecoin has come back to earth and hovered around 30 cents on the back of comments (again from Musk) that Dogecoin was “a hustle”.
On Friday, however, Dogecoin surged by 12% when (you guessed it) Musk confirmed the coin can be used to buy Tesla merchandise. Musk’s 5-word tweet “Tesla merch buyable with Dogecoin” has accumulated over 300,000 likes and 50,000 re-tweets since the announcement.
Dogecoin is known as a ‘memecoin’ because it has no inherent utility compared to other cryptocurrencies that are native currency for various blockchain projects. This makes the price of Dogecoin particularly sensitive to big news events that create short-term surges in interest.
The question to be answered in the coming weeks is if this tweet is the start of a long-term rally for Dogecoin up to its 2021 highs, or if it will be a short-term pump.
Many crypto analysts are paying attention to the US Federal Reserve’s approach to inflation. Goldman Sachs released a note to investors suggesting that the Federal Reserve will raise interest rates four times in 2022 as inflation is predicted to exceed 7.1%.
Last year saw an increasingly accepted narrative around inflation (particularly Bitcoin) that cryptocurrencies’ limited supply could be an effective hedge against inflation — just like gold. While this theory may be true in the long term, crypto investors have been subject to sell offs and crypto dumps caused by rising interest rates that have caused money to shift towards safer asset classes.
As the Federal Reserve restricts the flow of money in the market to address inflation, the riskier asset classes, like cryptocurrencies, will be susceptible to sell offs as investors consolidate their positions. The Crypto Fear and Greed Index is now at 21 (‘Extreme Fear’), suggesting that inflation and Federal Reserve action remains a key concern for crypto markets.
Block’s Open BTC Mining System
Last week, Block (formerly Square) founder, Jack Dorsey announced that the company is working to build an open Bitcoin mining system.
Bitcoin mining is the process by which new Bitcoins are entered into circulation and is usually performed using high-end hardware that solves extremely complex algorithmic problems. Until now this process has been in the hands of industrial-sized ‘miners’ who have set up facilities all over the world.
Block executive Thomas Templeton said the company wants to make mining “more distributed and efficient in every way.” Templeton describes it as a “long-term need” and says Block wants to make it so that “anyone, anywhere, can easily purchase a mining rig.”
Dorsey recently stepped down as CEO of Twitter in a move many believe will enable him to focus on Block’s pursuit of new initiatives in the crypto space. This hypothesis looks to be coming to fruition as Block’s foray into Bitcoin mining is on the back of current initiatives that allow the transfer of cryptocurrencies through their Cash App and comments in 2018 by Dorsey that Bitcoin would become the internet’s sole currency.
Upcoming Initial Coin Offerings
An initial coin offering (ICO) is the cryptocurrency equivalent to an initial public offering (IPO). During an ICO, cryptocurrency projects will raise interest in their project and sell an initial allocation of coins to investors to raise funds.
Here’s a list of the latest ICOs that are about to drop:
|Savage||20 Jan 2022|
|AnnihilationCE||21 Jan 2022|
|My Crypto City||25 Jan 2022|
[Source: Coin Market Cap]
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