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Chart of the Day

The broader crypto market is currently consolidating in a tight range as we approach the midpoint of the first week of 2022. In the early hours of Wednesday, and after failing to clear the $47.5k resistance level, BTC dipped below the $46k support zone to hit a local low at the $45.5k level. It has since regained the $46k support level, and is currently consolidating its losses below the 100-hourly moving average. ETH appears to have fared better, as it has just posted a marginal gain of 1.75% from 24 hours ago. As for the other major large-caps, most have also kept their price fluctuations within a modest range. Speaking of price fluctuations, there are signs that BTC may soon experience some of that to a larger extent in the near future. BTC's perpetual open interest has climbed to the highs of last November, signaling the fact that an increasing number of leveraged positions are starting to be built. This in turn suggests that the market could be ripe for a possible squeeze in either directions in the near term. In other news, several L2 scaling solutions have been steadily inching up in terms of the total value locked (TVL) on their protocols. If we recall, 2021 was an astonishing year of growth for most L1 chains. Now with numerous L2 scaling projects like Arbitrum, Optimism, and zkSync planning to release their tokens in Q1 of this year, 2022 might just be the time for the L2 ecosystem to truly shine. Token incentives will be of paramount importance with regard to an ability for these L2 projects to amass a larger TVL, whilst cross-L2 liquidity bridges will also be required to resolve the issue of cross-chain liquidity availability as well as infrastructure fragmentation.