If you thought that cryptocurrencies facilitate a path away from the clutches of centralized government authorities, think again. According to a recent report from the New York Times, the U.S. Department of Justice (DOJ) disclosed that it seized over $3.6 billion worth of stolen Bitcoin (CCC:BTC-USD). Further, the agency arrested a married couple accused of laundering cryptos, bringing the entire sector back in the limelight.
Of course, this time, the news presented the darker side of cryptos. Per the Times, “the couple, Ilya Lichtenstein, 34, and Heather Morgan, 31, were accused in a criminal complaint of conspiring to launder 119,754 Bitcoin that had been stolen in 2016 from Hong Kong-based Bitfinex, one of the world’s largest virtual currency exchanges.”
Based on the time last week when the seizure occurred, it represents the DOJ’s largest in terms of financial recovery, officials stated. How is that for a showpiece on cryptos?
Though Hollywood may abide by the adage that there is no such thing as bad publicity, for digital assets, the cultural paradigm may be completely different. While cryptos have certainly gained mainstream acceptance, legal issues may be more than enough to put off those sitting on the sidelines. And by the way, there are quite a few sitting on the sidelines.
According to a Pew Research Center report, while the vast majority of U.S. adults have heard about cryptos like Bitcoin, only 16% say they have personally invested in, traded or otherwise used virtual currencies. True, some folks could be lying: it is not the most comfortable topic to discuss, precisely for incidents like those mentioned above. But that still leaves a large number not participating in digital assets.
With more governmental attention on virtual currencies now, even those who are supporters of decentralized protocols and economies may be thinking about taking some profits, just in case. Certainly, the narrative for these alternative cryptos is not an easy one.
To be fair, cryptos have jumped substantially higher recently, which is an encouraging development. Still, with memories of the most recent correction still in mind, along with powerful headwinds along the way, we may be facing a 50/50 proposition moving forward.
Here are my top 7 alternative cryptos that should be on alert:
- Ethereum (CCC:ETH-USD)
- Binance Coin (CCC:BNB-USD)
- XRP (CCC:XRP-USD)
- Cardano (CCC:ADA-USD)
- Solana (CCC:SOL-USD)
- Avalanche (CCC:AVAX-USD)
- Dogecoin (CCC:DOGE-USD)
Alternative Cryptos: Ethereum (ETH-USD)
If cryptos are legitimately at a crossroads, then Ethereum perhaps best demonstrates this narrative. At the lows of this year, ETH appeared almost destined to dip into — and eventually below — the $2,000 level. However, a recent surge of bullish activity brought Ethereum back from the brink. Is it now time to get back onto the bull wagon?
That is an incredibly tricky question to answer because ETH’s 50-day moving average — a common barometer of nearer-term market strength — is acting as a resistance barrier. While you shouldn’t spend too much time on any one indicator, the reality is that the market is also assessing the price action with these established barometers.
I encourage you to conduct your own due diligence and consider a broad range of viewpoints before making your decision. However, my take is one of skepticism. While cryptos present massive upside potentiality, when they correct, they often do so harshly and across years, not months.
Ultimately, I can only persuade investors to take a cautionary approach with Ethereum.
Binance Coin (BNB-USD)
It is crazy to think about, but at the beginning of January of last year, Binance Coin was trading below $40. Today, despite the myriad choppy sessions that took stakeholders on a stomach-churning ride, one BNB can be exchanged for around $422. That is a massive upside, which also brings up serious concerns.
Frankly, when it comes to cryptos, the higher they go, the more liable they are to eventually come crashing down. While Binance Coin has an edge as the underlying exchange offers more selections than other mainstream platforms, this is a commoditized advantage. In other words, competing exchanges can always expand their portfolio, impinging on Binance’s market share.
For me, though, it all boils down to investor sentiment — and I’m not seeing much evidence that BNB is ready to break out yet. For one thing, BNB is trading just underneath its 50 displaced moving average (DMA) — which also recently dipped below the longer-term 200 DMA — indicating trouble accruing positive momentum.
As with other cryptos, I am in the skeptical camp on this one.
Alternative Cryptos: XRP (XRP-USD)
One of the most controversial cryptos due to its focus on integrating utility with mainstream applications rather than promote a true decentralized ecosystem, XRP — a virtual currency which undergirds the blockchain network of Ripple Labs — was nevertheless a crowd favorite. But then, the U.S. Securities and Exchange Commission alleged in a lawsuit that Ripple violated securities law, using XRP to sidestep regulations.
The lawsuit has clouded XRP since then. However, Protocol.com recently reported that a federal court judge presiding over the case ordered certain documents to be unsealed. Crypto traders anticipate that “the currently sealed legal documents would show that the crypto company got legal advice from an outside law firm which concluded that XRP were not securities.”
If that is the case, it would certainly help the cause for XRP. To be sure, XRP recently blew through its 50 DMA. At time of writing, it is sandwiched between the 50 DMA at bottom and the 200 DMA at top.
Because of the uniqueness of XRP being involved in a high-profile lawsuit, an upside surge isn’t out of the question. However, there is always a risk of legal matters not moving your way.
When Cardano was trading in literal penny-stock territory, many folks simply acquired a stake based on speculation. Though the concept of its underlying proof-of-stake protocol was intriguing, arguably, it wasn’t the main catalyst. Instead, it was one of the legitimate alternative cryptos with an ultra-low price tag. So, why not take a dip?
Those who had that attitude early on in the game certainly made off like bandits. But now that ADA has been trading above $1 territory for quite some time, the paradigm is different. If you’re wrong about the fundamental arguments bolstering Cardano, ADA could incur a severe decline.
Remember, there is no plunge protection team with cryptos. You’re at the mercy of pure supply and demand.
That is the main reason I am not the most ecstatic person regarding Cardano. Again, I encourage you to perform your due diligence and consider the full spectrum of opinions. But if ADA was so wonderful, I find it troubling that its 50 DMA continues to stymie upside momentum. My take? Be careful.
Alternative Cryptos: Solana (SOL-USD)
Don’t think that I’m picking on any one blockchain project. With rare exceptions like XRP due to its legal challenges, the dynamic seen in one virtual currency tends to be replicated in most other cryptos. And I am afraid I can’t say much is different with Solana.
Of course, I understand that it is a shame to say this. Many regard Solana as one of the possible Ethereum killers. The Solana network promotes various decentralized functions, much like Ethereum. But unlike its more popular cousin, Solana features high speed, scalability, utility and security, but at a lower cost than ETH-based transactions.
As you’re probably aware, one of the core challenges with Ethereum is that it got too big for its britches. Network transaction fees (called gas) became onerous, sparking an exodus of blockchain developers to competing platforms. SOL was a beneficiary, clearly. But is the upside it accrued over the past year sustainable?
Presently, SOL trades conspicuously beneath its 50 and 200 DMAs, which is troubling. In order to have confidence, SOL needs to be at around $160, not its present $114.
Per a description by Coinmarketcap.com, “Avalanche is the fastest smart contracts platform in the blockchain industry, as measured by time-to-finality. Avalanche is blazingly fast, low cost, and eco-friendly. Any smart contract-enabled application can outperform its competition by deploying on Avalanche.”
While I have no doubt that the AVAX architecture is impressive, the volatility of cryptos confirms that you should never be too dazzled with marketing lingo. At the end of the day, the brutal reality is that people will buy what they want to buy.
If they want to acquire Avalanche for its speed and utility, that is where the money will go. If they would rather focus on pup coins, who are you to argue? You can, but you would most likely be wasting your time.
As for AVAX’s market sentiment, it is facing a similar conundrum with other cryptos in that it is banging its head against the 50 DMA. However, a key difference is that the 50 DMA here is above the 200 DMA, so no “death cross” yet. Still, I interpret the overall profile as a low-confidence setup.
Alternative Cryptos: Dogecoin (DOGE-USD)
Speaking of pup coins, we have the one that started it all, Dogecoin. While it has generated substantial interest over the trailing year, DOGE is now more characterized with low return on investment than anything else.
Back when Dogecoin really started to force mainstream analysts to take it seriously, any mention of DOGE by a celebrity or social influencer was enough to see the digital asset skyrocket. Now, the community is just not feeling it. Despite the fact that you can now buy some Tesla (NASDAQ:TSLA) merchandise with Dogecoin, it hasn’t been enough to consistently move the needle.
In an almost identical tale to other cryptos, DOGE finds its 50 DMA as a steadily sinking upside barrier preventing forward progress. And that is why I am saying Dogecoin now has low return on investment. No matter what the news item is, no matter which celebrity is pumping it, DOGE cannot seem to get out of its funk.
Even volume levels of particularly bullish sessions have been declining, meaning that you’re probably better off waiting for sure signals before taking a position.
On the date of publication, Josh Enomoto held a LONG position in BTC, ETH, XRP, ADA and DOGE. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.