- Bitcoin (BTC-USD): The king of cryptos recently received a burst of mainstream credibility.
- Ethereum (ETH-USD): Through burning significant supply of ETH, Ethereum could be interesting.
- Tether (USDT-USD): Stablecoins may represent a new form of international money.
- XRP (XRP-USD): A recent lawsuit involving XRP draws fresh demand for legal clarity.
- Cardano (ADA-USD): With ADA experiencing a massive volume uptick, Cardano is alive again.
- Solana (SOL-USD): Several technical indicators suggest that SOL is on the way higher.
- Polygon (MATIC-USD): The multi-chain system innovator has been attracting heavyweight talent.
When Russian President Vladimir Putin apparently gave the order to invade Ukraine in relative isolation, he first and foremost imposed unnecessary loss of life. At the same time, he disrupted the modern global order of diplomacy over warfare. Suddenly, the stability that everyone took for granted impacted everything, including cryptocurrencies. Indeed, in some ways, cryptos suffered the worst of the fallout.
Though the stock market of course absorbed volatility, both participants and lay observers know that the equities sector has a long and storied tradition. But with cryptos, the equivalent story only goes back to around 2009. Before that, virtually no one had any clue that a little innovation called the blockchain would revolutionize the financial and business ecosystems of today.
Hence, the conflict in eastern Europe represented a severe baptism of fire for cryptos. While they suffered significantly, on the optimistic front, they’ve managed to hold their own. And with signs that both sides of the battleground are at least willing to entertain cease-fire discussions, this one bit of hope has been enough to bolster digital assets.
While caution remains the key, investors ought to keep an eye out for the below cryptos:
After slogging around (and largely beneath) the $40,000 resistance level throughout much of the eastern European conflict, Bitcoin has finally started to come alive. At time of writing, BTC was trading hands above the $42,000 mark. What’s more, a few hours earlier in the wee hours of March 22, the king of cryptos poked its head above the $43,000 level.
Recently, Bitcoin received a much-needed shot in the arm when iconic Goldman Sachs (NYSE:GS) executed the first over-the-counter crypto transaction by a major U.S. bank, per a Barron’s report. Specifically, Galaxy Digital (OTCMKTS:BRPHF) helped Goldman execute a non-deliverable option on BTC.
While the technical details of the transaction may be both granular and mundane, the biggest takeaway is that a world-renowned financial institution legitimized Bitcoin and by logical deduction, other cryptos. Combined with some signs that the crisis in Ukraine does not need to last indefinitely, it’s very understandable why so many crypto believers are excited about BTC.
Just recently, a Fortune article ran with a headline that mentioned Ethereum “destroyed almost $6 billion worth of its own cryptocurrency on purpose.” Typically, enterprises holding assets of value want to protect them at all costs. Undoubtedly, the concept drew a lot of eyeballs, particularly among those who are not well versed with the concept of burning cryptos.
Usually, burning digital assets involves sending them to “fake” or invalid addresses. Since transactions are one-way streets and cannot be revoked, once sent, they are burned forever. Subsequently, this is a good reminder to make sure that whenever you’re moving cryptos to double check, and maybe triple check, just check your dealings.
Anyways, the Ethereum team burned a significant portion of ETH supply to mitigate the impact of spam transactions that could essentially ruin the user experience for everyone. Such loopholes are important to plug as the team migrates its proof-of-work protocol to proof of stake.
For the investor, though, the burning provides an intriguing potential equation: lower supply, larger demand.
While it’s old news now, the concept of stablecoins like Tether representing a new class of international currency deserves additional consideration. As you may know, stablecoins earn their name due to being pegged to a fiat currency, typically the U.S. dollar. The primary benefit of cryptos like Tether is that they allow investors to leverage the purchasing power of fiat currencies while still operating in the realm of the blockchain.
In other words, you don’t have to deal with the slow and cumbersome process of constantly converting fiat to cryptos and vice versa. Instead, you maintain the stability of greenbacks for example while never actually converting your funds to fiat.
As you might imagine, USDT shares a one-to-one ratio with the dollar. However, Coindesk reported that at the start of the eastern European conflict, Ukrainian exchanges were charging a hefty premium over the $1 stated price.
Such a cynical move does demonstrate the power of stablecoins and their incredible flexibility. Should circumstances unfortunately worsen, USDT is something to keep a close eye on.
One of the lingering problems impacting cryptos is their jurisdictional ambiguity. No one knows this more than Ripple Labs, the originator of the XRP coin. Finding itself under the gun by the Securities and Exchange Commission, the regulatory agency asserts that Ripple used XRP as a means to sidestep securities laws. Of course, Ripple denies this, leading to a bitter and ongoing court case.
However, XRP is indirectly embroiled in another controversy. This time, Coinbase (NASDAQ:COIN) received the business end of a class-action lawsuit. It names XRP as one among 79 cryptos that Coinbase let its customers buy and sell without disclosing that they were securities.
Whether or not XRP and the other cryptos are actually securities will be decided in court. However, these legal accusations raise the bigger concern. Without clarity as to what cryptos are — and just as importantly, what they’re not — investors can expect similar distractions at greater frequencies in the future.
Thus, I would monitor the original Ripple/XRP lawsuit since it has strong implications for the entire blockchain ecosystem.
In my opinion, Cardano is easily among the most vexing cryptos. On the fundamental aspect, the Cardano team essentially pioneered proof of stake, the very protocol that Ethereum is migrating toward. So little questions exist that ADA is backed by strong acumen. But over the last several months, the blockchain project has been falling behind the competition.
On the technical front, the ADA coin cannot seem to break above resistance, which has been represented by its 50-day moving average. Even worse, Cardano slipped below the psychological important one-dollar level. Being back in “penny stock” territory hasn’t done much good for confidence, considering that ADA was previously challenging the $3 threshold.
Still, Cardano is finally showing some signs of life. Per data from Finbold.com, ADA’s transaction volume recently was four-times higher than that of Bitcoin at $68 billion. That’s quite the bullish army.
The logical target for ADA is to break above the $1 mark. Until then, I’m going to be somewhat skeptical. But above a buck, Cardano could get very interesting.
One of the new breed of utility-based cryptos, Solana aims to be everything that Ethereum is while providing superior speed and scalability. But here’s the kicker — the SOL architecture claims it can do so much cheaper than Ethereum can and will stay committed to its low-cost profile.
Prior to the disruption of the modern global order, Solana banked on growing discontent with ETH users regarding its network’s transaction fees (called gas). Sharply rising costs sent a migration from Ethereum to alternatives like Solana, much like you would expect to see from combustion-powered cars to electric vehicles if EVs were financially accessible to the average household.
Fortunately for SOL bulls, crypto analysts also see multiple technical catalysts that can boost Solana. First, the SOL price has been relatively stable since late January of this year, suggesting a possible buildup of positive sentiment. Second, a bullish wedge could be forming in the Solana price action, which could eventually skyrocket its valuation.
As well, several minute details further provide confirmation, which means speculators should keep SOL on their radar.
With the blockchain undergoing a significant evolution, proponents of cryptos and decentralized ecosystems are no longer satisfied with mere profitability. If that were the end game, they could easily speculate through other venues and be just as satisfied. Instead, crypto advocates are a different breed, seeking both monetary gain and paradigm-shattering disruption.
However, said disruption won’t go anywhere unless the myriad blockchain networks that are available today have a way of communicating and engaging with each other. Logically, isolated blockchain silos would defeat the purpose of extracting utility out of the underlying innovation. That’s where Polygon comes into the picture, providing a multi-chain system or an internet of blockchains.
While similar to other multi-chain platforms, Polygon leverages Ethereum’s security, ecosystem and transparency. Even better, the team has been incredibly successful poaching Web 3.0 developers from renowned businesses and institutions.
If anything, Polygon’s HR initiatives suggests that it’s serious about disruption and not pursuing wonky protocols for its own sake. Thus, MATIC could be enticing if other cryptos end up marching higher, thereby carrying the entire sector.
On the date of publication, Josh Enomoto held a LONG position in BTC, ETH, USDT, XRP and ADA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.