Issue 21

February 17, 2023

The State of Layer 2s: Arbitrum vs. Optimism

Contents

Introduction

By The Moralis Research Team

Welcome back, everybody. It’s been another exciting week in crypto, and we’re pleased to bring you the next edition of Moralis Research. Today, we will be interested in getting your feedback on the content of these reports. Please take a few minutes to give us your feedback here.

This week we saw a good rebound in the market, with bitcoin rising by more than 15%. However, many still fear whether this is the confirmation of a rebound or just a bull trap. A potential Wyckoff accumulation could be playing out. Only time will tell whether the price continues from here or we get a reversal.

Regulators continue to crack down on crypto. The SEC labeled BUSD as an unregistered security and is therefore suing its issuer, Paxos. However, many crypto talking heads wonder whether this ruling makes sense as people buying BUSD have no expectation of receiving a profit in return. As CZ – Binance CEO stated, if BUSD is ruled as a security by the US courts, it will profoundly impact how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such. We think it is in the interest of the USA to allow USD-denominated stablecoins in crypto as they enable people to price crypto assets in the world’s reserve currency, the dollar.

In a scenario where the US bans stablecoins completely, the industry would still find a way to price assets on-chain, as was the case before the arrival of stablecoins. Altcoins could be priced in terms of BTC or ETH. Or the emergence of completely decentralized algorithmic stablecoins such as LUSD will be useful.

In traditional markets, the hype around AI is starting to die down as Microsoft’s AI Bing chatbot fumbles answers. Testers of the bot have been subjected to insults and disturbing answers, prompting concerns over its safety. Microsoft replied to this by saying they learned a lot during the testing phase and will use this feedback to improve the service.

We’ll always provide you with our research to help with your education. We’ll keep close track of the main developments and evolution of the niches in blockchain so that you get the best of the new knowledge. When you’ve finished reading your report, please remember to fill out the feedback form, your feedback is valued, and we’re always open to suggestions.

Cryptocurrency Market Overview and Analysis

For those new to my analysis, I do trend trading over long timeframes.

Global tech only has two outcomes: Giant success or catastrophic failure. Tech either does a 100x or goes to zero, with little in-between. Before reaching either end point, the asset price will trend for extended periods.

My process aims to give exposure during those periods of established trends. That way I can enter with more capital for any given risk, compared to a hold only approach. I don’t try to catch tops or bottoms. I don’t worry about intraday movements. My style of analysis is not suitable for day traders or range traders. When it comes to tech, the big gains come from catching big moves over long periods of time.

This is an analysis at one moment in time. Market structure can change in an instant. When presented with new information, I will adjust my opinion accordingly. Technical analysis of historical data is not a prediction of the future. It is a tool that can aid in finding setups for favorable risk-reward and points of invalidation.

FOR GENERAL INFORMATION PURPOSES ONLY, NOT FINANCIAL ADVICE.

All information presented in this report references an opinion of the author and is for general information purposes only. You must not construe any information presented as legal, tax, investment, financial, or other advice. Nothing presented constitutes a solicitation, recommendation, endorsement, or offer to buy or sell financial instruments. I am not a licensed financial advisor or registered investment advisor. For financial or investment advice, seek a duly licensed professional in your jurisdiction, who can take your specific situation into account. Past performance does not indicate future results. You are always at risk of losing all invested funds. I don’t give advice to buy or sell specific assets. The education and software tools are timeless and generic for any asset. Rather than relying on subjective market opinions, I apply the principles of technical analysis formulated in 1930s on historical charts. Anyone can apply the same process and get the same result. Technical Analysis does not predict the future. It is a tool to find setups for controlled risk/reward. Larsson Line does not predict the future. It is a mathematical formula for trend expression. My objective with this report is to help you reflect on your own analysis, not to replace it.

Disclosure: I hold Bitcoin and Ethereum exposure through company ownership and in my personal capacity, as ETP price tracker certificates through my bank.

Trend Analysis

Bitcoin (BTC)

Rejected at first resistance

Ethereum (ETH)

ETH/BTC is stuck against upwards resistance.

Binance (BNB)

BNB/BTC trend is down. Close to confirming H&S top.

Cardano (ADA)

ADA/BTC trend is down. Rejected at resistance.

Solana (SOL)

SOL/BTC triangle pattern broke down.

XRP

XRP/BTC is ranging.

Polygon (MATIC)

MATIC/BTC is very close to range breakout!

Bitcoin (DOMINANCE)

Hitting up against resistance but not broken out.

Gold

Trend is up. Chart is ranging. Fundamentals seem positive.

Uranium

Trend is up. Chart is a symmetrical triangle. Fundamentals seem very positive.

Bitcoin

Reached 25k, rejected at resistance

The picture so far is clear: Bitcoin got a rejection at the first real resistance at 25k.

That sets us up for a possible Inverse Head & Shoulders pattern in case we retrace from here, consolidate, and then break through the 25k neckline later. That would be a stellar R/R to enter.

The problem from last Friday about the slanting neckline is now resolved, because we have now actually reached 25k. Great!

The trend remains up and I’d love another opportunity to buy at support.

Web3 Wallet: Start Guide

Metamask Wallet

In this overview we are using Metamask, the most popular Web3 wallet and ID system. Alternative methods do exist but are not explained in this overview. For a more detailed tutorial navigate to Moralis Blog.

STEP 1 Download and install the Metamask wallet

Bitcoin dominance remains range bound, as drawn below.

A range can break out in either direction and it’s usually a mistake to try to guess in which direction, before it has actually happened.

At one point it will, and that will be my clue for how to position myself between BTC and alts for the next major move of the markets.

The chart is here shown with 3 day candles.

STEP 2 Get Started

Once downloaded and installed, we are presented the option to  [Get Started].

STEP 3 Import or create new wallet

Once downloaded and installed, we are presented the option to  [Get Started].

STEP 4 Opt out of Data collection

Once downloaded and installed, we are presented the option to  [Get Started].

STEP 5 Set up your password

Next we must specify a password for our wallet, this password will be used when signing transactions (we specify a password and agree to terms in order to continue). This is not a private key.

STEP 6 Watch the instructional video

Next, the wallet displays an instructional video on seed key security. The video is highly recommended for new users, or anyone generating a seed for the first time.

STEP 7 Create your seed phrase

Selecting the [Next] button, prompts the generation of a new seed phrase, a related warning is displayed.

STEP 8 Verify your seed phrase

After revealing our seed phrase and storing it securely, the [Next] button becomes selectable. Proceeding from here, we are asked to confirm the phrase as a final security check, to make sure that you have stored the seed phrase accurately. By simply selecting the words in the correct order, our seed phrase is verified, and the [Confirm] button becomes selectable.

STEP 9 Complete wallet setup

Once selected, the final confirmation page indicates that our wallet setup is now complete. Here we select [All Done] and our wallet is ready.

STEP 10 Start using your wallet

When looking to receive funds (cryptocurrency or NFTs), the public address can easily be copied from the top of the browser extension wallet.