After a robust performance last week, circumstances appeared quite auspicious for many of the top cryptos to watch. Unfortunately, Monday started off with the blues for the blockchain ecosystem, with several major coins and tokens printing red ink. Toward the end of last week, the total market capitalization of all digital assets moved toward the $1.2 trillion level. At the moment, it’s down to around $1.13 trillion.
Fundamentally, CNBC reported that the Commodity Futures and Trading Commission (CFTC) accused Binance of violating eight provisions of a commodities trading law “designed to prevent and detect money laundering and terrorism financing.” As the world’s largest exchange for cryptos to watch, Binance carries significant clout in the crypto space. Therefore, many investors got jittery about the wider implications for blockchain-derived assets.
Interestingly, the volatility of cryptos to watch may have been telegraphed. As I pointed out last week, rising valuations for several individual coins failed to spark a corresponding rise in volume. Such a contradiction typically indicates a low-confidence rally, something to keep in mind for trading any asset class. Moving forward, the cloudy fundamentals also suggest investors need to approach the sector prudently. Below are the top cryptos to watch this week.
On Monday evening, Bitcoin (BTC-USD) traded hands for a little over $27,000. In terms of performance, BTC slipped 3.3% in the past 24 hours. Moreover, in the trailing seven-day period, it gave up over 2% of its market value.
Last week, I warned about the possible implications of the coin’s “megaphone pattern.” Should Bitcoin fail to break out of the 27K to 28K price range, a trip below both its 50- and 200-day moving averages would not be out of the question. Again, a key barometer to watch is the relationship between price and volume.
In Bitcoin’s case, the price of the asset began jumping on March 11. During this time, volume levels generally faded, which isn’t what you want to see as a bull. Essentially, robust price action should align with robust trading volume across an army of investors. Unfortunately, it appears that only thin support boosted last week’s rally, hence the current struggles. For BTC to sustain positive momentum, it must start challenging the 30K barrier. Otherwise, a trip below 20K beckons.
Continuing to slot into the number two position of all cryptos based on market cap, Ethereum (ETH-USD) ended up shedding nearly 4% of market value in the past 24 hours. However, it managed to pare back losses compared to Bitcoin in the trailing week, losing 1%. At present, ETH trades hands for a little over $1,700.
As with other cryptos, one of my main concerns about Ethereum was the printing of the megaphone pattern. To be fair, this chart pattern carries both bearish and bullish implications. At the same time, circumstances didn’t seem to align well for ETH. In a similar framework to Bitcoin, Ethereum’s declining volume trend throughout March failed to correspond with its rising price.
Higher prices on lower volume (participation)? That’s not just a warning sign for cryptos but for any publicly traded investment category. To be sure, that’s not to say that ETH has zero chance of moving higher. But it must break out of its fund around the $1,800 resistance barrier and start a charge to 2K. If not, the natural implication points to a drop to its 200 DMA ($1,437) or maybe slightly lower.
While speculation in the field of capital gains attracts the most attention regarding cryptos to watch, stablecoins like Tether (USDT-USD) represent a critical cog in the flywheel. To use an automotive analogy, Tether plays the role of a (combustion-powered) car’s transmission, essentially transferring the power of the engine to the wheels.
In the realm of cryptos, Tether represents the convenient gateway between the fiat and virtual currency networks. Fundamentally, a conversion process must take place from dollars (or other national currency) to digital assets. However, by keeping dollar-denominated wealth in the form of stablecoins, it’s much easier for traders to advantage of opportunities.
However, the platforms undergirding cryptos – including stablecoins – face the unlikely but not impossible threat of complete implosion. Therefore, investors really need to decide if the extreme risk exposure is worth it. Keep in mind that the U.S. government recently issued a statement protecting its institutions. However, it’s highly unlikely that similar protection would be afforded to stakeholders of failed blockchain enterprises. So, proceed carefully.
With the spotlight glaring on BNB (BNB-USD), it’s no surprise that the digital asset underlying the Binance exchange suffered sharply relative to many other cryptos. In the trailing 24 hours, BNB dropped nearly 6% of market value. In the trailing seven days, BNB dipped more than 7%. At the moment, BNB trades at a hair over $310.
Given the legal woes surrounding Binance and the implications for cryptos overall, BNB faces a significant hurdle ahead. Conspicuously, BNB’s present price point has it sitting on its 50 DMA (which pings at $309.71). As a bullish near-term target, BNB aims to take out the $350 level convincingly. However, to really inspire confidence, it needs to make a serious challenge for the $400 mark.
Frankly, that’s going to be a very difficult hurdle just based on the typical volatility for cryptos. Tack on the legal ramifications and BNB could easily fall below its 200 DMA, which sits at $290. Either way, a cautionary approach is critical for BNB.
While most cryptos to watch generally trade along Bitcoin’s lane, in some cases, certain coins or tokens disassociate from the main trend. That’s the story with XRP (XRP-USD) at the start of the week. A concoction of Ripple Labs, XRP gained over 5% of market value in the past 24 hours. And in the trailing seven days, it gained more than 24%. That’s higher than any other coin in the top 20 by market cap at the time of writing.
Fundamentally, it’s possible that investors may be anticipating a positive result from the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple. If Ripple wins the legal battle – and that’s a big “if” – XRP would enjoy legal backing. That would distinguish the coin from practically every other digital asset, giving it a massive advantage.
Interestingly, since June of last year, XRP has generally printed a series of rising lows. Still, it’s got some work to do. To establish true confidence, XRP needs to challenge the 80-cent level. Otherwise, it faces volatility risks clouding other cryptos.
From one of the best-performing cryptos to one of the uglier stories, Solana (SOL-USD) sadly struggled in recent sessions. Over the past 24 hours, SOL faded to the tune of 4%. In the trailing week, the coin dropped nearly 12% in market value. It may be a do-or-die moment for the embattled asset.
Right now, SOL trades hands at $19.85 a pop. That’s a bit lower than the 50 and 200 DMAs, which essentially converged at $21.59. Therefore, at the absolute bare minimum, SOL must get above $22 to even think about generating broader upside confidence. But the narrative only gets more challenging from there. Technically speaking, the $30 level has acted as long-term resistance for the past several months. To spark a credible rally, SOL must convert resistance to support. After achieving this goal, the $100 price target represents the next meaningful threshold. Otherwise, a return to the low teens could be in order.
Once generating excitement as a potential Ethereum killer, Polkadot (DOT-USD) now sits on the outside looking in. Ranked as number 12 among all cryptos based on market cap, it just lacks a bit of momentum to break into the top ten. Certainly, losing 2.5% of market value in the past 24 hours and nearly 5% in the trailing week don’t help.
Currently, DOT trades hands at $5.85 a pop. Notably, it runs below the 50 DMA ($6.32) and the 200 DMA ($5.98). Given that both indicators represent commonly viewed barometers of market health, you’d like to see DOT swing higher quickly if you’re a bull. Assuming it does, it still has myriad challenges ahead. First off, Polkadot must establish a support line at $7.50. For the last several months, though, this price point acted as resistance. Obviously, the bulls will need to flip this narrative. From there, DOT will need to mount a serious challenge for $20.
Unfortunately, if Polkadot doesn’t attract bullish momentum soon, I could see it falling toward $5, if not lower. Let the buyer beware.
On the date of publication, Josh Enomoto held a LONG position in BTC, ETH, USDT, and XRP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.