On paper, cryptos to watch appear to be setting the foundation for yet another remarkable rally. Yes, the sector experienced a burst of technical momentum that comfortably lifted the sector’s total market capitalization comfortably above the $1 trillion level. Previously, the sector appeared at risk of falling beneath this benchmark. Nevertheless, technical momentum has always been part and parcel of cryptos.
Instead, with this latest rally, a critical fundamental catalyst may have bolstered sentiment; namely, China’s economic recovery. Specifically, Chinese monetary policy remains an outlier, according to Reuters. With an economy featuring a slow recovery pace and benign inflation, the People’s Bank of China has some flexibility to instill an accommodative (dovish) policy. That would be inflationary, translating to potentially higher valuations for cryptos to watch.
On the other hand, several other fundamental factors impose headwinds on digital assets. With fears rising of China crossing a “red line” of supporting Russia militarily, the U.S. could respond aggressively. If so, the broader implications might hurt these top cryptos to watch. Combined with domestic concerns such as the Federal Reserve’s hawkish monetary policy, blockchain investors must be vigilant.
As of the evening of Feb. 20, Bitcoin (BTC-USD) found itself trading in and out of the $25,000 level. At this point, BTC gained nearly 3% over the past 24 hours. And in the trailing seven days, the benchmark of all cryptos returned stakeholders 15% of market value. However, where it goes from here is anyone’s guess.
As Rachel Lin, CEO of crypto derivatives platform Synfutures told Barron’s, Bitcoin enjoyed significant positive price action. As well, volume pinged higher than it had been in the prior two weeks. Unfortunately, Lin remarked, “positive price action has not been accompanied by good fundamental news.”
Per Barron’s, “…cryptos have been climbing seemingly in spite of a spate of regulatory storm clouds gathering around the space. U.S. regulators have taken several lines of action in recent weeks to crack down on crypto companies as well as products and services including stablecoins and staking—raising the prospect of a tougher operating environment in the world’s largest economy.”
Due to conflicting fundamental signals, investors should be extremely cautious about BTC or other cryptos to watch.
On Monday evening, Ethereum (ETH-USD) stood just above the $1,700 level, representing a significant boost in sentiment. Over the past 24 hours, ETH gained nearly 2% of its market value. And in the trailing seven days, the seemingly perpetual number two of all cryptos by market cap moved up 14%.
Moving forward, Ethereum will need to start making significant inroads into $2,000 at minimum to sustain this rally. Otherwise, the bears might start getting some ideas. From this vantage point, a move to 2K would only be a 17% move – a nothing-burger for cryptos. However, it’s a nothing-burger under bullish cycles. Under the current environment, nothing can be taken for granted.
Fundamentally, conservative investors need to watch the broader fundamentals, which present an ambiguous framework. Yes, the Chinese do have the option of steadily injecting liquidity into their monetary system. However, the Fed remains committed to the opposite hawkish trajectory. Given that the dollar epitomizes the world’s most important currency, ETH investors should exercise prudence.
As a stablecoin pegged to the dollar, Tether (USDT-USD) saw no unusual price action recently. Over the past 24 hours, USDT slipped barely a whisker below parity. Over the past seven days, USDT declined by almost 0.1% – nothing remarkable. However, those seeking some clues as to where cryptos to watch might go next should drill into certain details.
Specifically, using Coinpaprika.com’s blockchain analytics, the number of transactions involving USDT began declining noticeably since Valentine’s Day. Further, going back to the trailing month period, the recent decline in transaction count broke a rising-series-of-lows pattern. Maybe it means something, maybe it means nothing but it’s worth observing prior to any large moves.
Also, it’s curious that Tether transactions based on geographic location are split 55% in favor of the western time zone compared to 45% of the eastern time zone. Here’s the concern: if China starts a dovish policy, then the eastern time zone investors should have a greater incentive to buy dollar-pegged Tether. That they do not present a possibly strange circumstance.
In the final hours of the Feb. 20 session, Cardano (ADA-USD) managed to post a solid performance. In the past 24 hours, ADA moved up a little over 1%. Further, in the trailing week, the coin jumped more than 13% in market value. Presently, it features a market cap of $14 billion.
In the near term, Cardano posted some encouraging stats. At the moment, ADA trades hands for a bit over 40 cents. That’s noticeably above its 50-day moving average at 36 cents. And it’s also above the 200 DMA, which stands at 38 cents. For quite some time, the 200 DMA imposed a long-term ceiling against the Cardano price. Therefore, the latest rally is technically and symbolically significant.
However, ADA still has plenty of work to do to convince the bulls to put their risk capital to work. The next upside target for Cardan will be 45 cents, where a horizontal support line exists. That’s a bare-minimum target. To generate true excitement, ADA must move to 80 cents, signifying a tall order. Therefore, as with other cryptos to watch, caution is key for Cardano.
Slowly heading toward the Feb. 21 session, Dogecoin (DOGE-USD) also delivered solid results for its stakeholders. In the past 24 hours, DOGE gained a hair above 1%. Also, in the trailing seven days, it managed to deliver 8% of market value. At the time of writing, Dogecoin features a market capitalization of $11.7 billion.
As with other cryptos, Dogecoin enjoyed a significant burst of investor sentiment. Right now, DOGE stands on the cusp of breaking into the 9-cent level. Significantly, DOGE stands above its 50 DMA, which pings at 8.5 cents. Also, it trades above its 200 DMA, which sits a little lower at 7.8 cents.
Since late October of last year, DOGE appears to be charting a series of higher lows. And it’s possible that the meme coin could be charting a triangulation pattern. If so, at the apex, Dogecoin could swing dramatically higher. However, as with other cryptos, DOGE has a long way to go. First, without question, it must take out the psychologically important 10-cent level. From there, 15 cents represents a bare minimum to restart bullishness.
For the Monday night session, Solana (SOL-USD) displayed a clash of relatively soft near-term performance with ultra-strong longer-term performance. In the past 24 hours, SOL gained about 0.85%. However, in the trailing seven days, SOL returned a massive 25% of market value to stakeholders. Though encouraging, SOL must traverse a difficult road ahead.
Currently, SOL trades hands at $26.10. This puts the digital asset above its 200 DMA, which stands at $25. As well, Solana ranks above its 50 DMA, which slots in at $21.61. Still, at a bare minimum, SOL must move up to around the $32 level where horizontal support exists. True, it’s only a 22% to 23% move higher. However, you can’t take anything for granted in cryptos right now.
Also, having achieved this level, Solana must attempt to take out roughly the $60 level before reaching $100. Keep in mind that during 2021’s incredible rally, Solana appeared to make a legitimate effort toward $300. Of course, it fell short. But to convince the bulls, you’d figure SOL must at least get back to triple digits.
Rounding out this list of cryptos is Polkadot (DOT-USD). On Monday night, Polkadot actually slipped 0.75% in the past 24 hours. However, in the trailing seven days, DOT gained a robust 22% of market value. Presently, the coin carries a market cap of around $8.64 billion.
As with other cryptos, recent price action seemingly bodes extremely well for Polkadot. At the moment, DOT trades hands at roughly $7.46 a pop. That’s well above its 200 DMA, which pings at $6.29. Also, the 50 DMA sits below the aforementioned marker at $6.06. Under common assumptions of the technical approach, a bullish reversal may be in order.
However, cryptos are incredibly complicated right now. For the bulls, the next logical target for Polkadot would be the psychologically significant $10 level. However, from there, it must break into the $20 price point. Basically, you’re asking for tall order after tall order due to Polkadot’s extreme movement and velocity. Therefore, it’s best to deploy a cautionary strategy.
On the date of publication, Josh Enomoto held a LONG position in BTC, ETH, USDT, ADA, and DOGE. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.