After a rough week in the cryptocurrency sector, as stubbornly high inflation highlighted monetary policy fears, macro concerns will likely dominate proceedings for cryptos to watch again this week. As CNBC pointed out on Sunday evening, investors will face a series of top-level economic data. Beyond commentary from Federal Reserve chair Jerome Powell, the upcoming Feb. should move both equities and digital assets.
Notably, economists polled by Dow Jones expect 225,000 jobs added last month. This follows a blockbuster Jan. jobs report which saw the economy adding 517,000 payrolls. However, if the employment figure runs better than expected, the Fed may raise the benchmark interest rate. To combat stubbornly high prices, the rate hikes could be aggressive, thus hurting cryptos.
Of course, if the latest data implies that the Fed’s actions yielded progress, blockchain assets could move decisively higher. One thing’s clear: investors need to approach cryptos to watch cautiously this week.
Cryptos to Watch: Bitcoin (BTC-USD)
In the early hours of the Monday session, Bitcoin (BTC-USD) found itself struggling for traction, losing about a third of a percent over the past 24 hours. However, in the trailing week, BTC declined by nearly 5% of market value. Moving forward, the Friday jobs report will likely provide a clear trajectory for BTC and other cryptos.
To be clear, the present technical profile for Bitcoin doesn’t present an encouraging picture. With the volatility that materialized last week, BTC slipped below its 50-day moving average, which stands at roughly $22,973. It’s comfortably above its 200 DMA, which sits at around $19,708. However, it’s not comforting for BTC to sit below its near-term technical gauge.
On the other hand, Bitcoin features a pattern of falling prices and decreasing volume. Theoretically, this framework sets up a bullish interpretation. If a breakout does occur, advocates of cryptos will be targeting the critical $30,000 level.
Cryptos to Watch: Ethereum (ETH-USD)
Several hours before Monday’s opening bell on Wall Street, Ethereum (ETH-USD) found itself in a similar situation to Bitcoin. In the trailing 24 hours, ETH dipped about three-fourths of a percent. And in the trailing week, the number two digital asset by market capitalization fell nearly 5%. As with other cryptos, high-level economic data should lay a clear foundation for either direction.
Technically, ETH’s profile presents a cautionary tone. Again, because of last week’s volatility, ETH suffered a dip below its 50 DMA, which stands at $1,611. In contrast, ETH at the time of writing meanders at $1,559. It’s well above its 200 DMA, which sits at $1,428. Still, Ethereum will need to see upside momentum soon to interest bullish market participants.
However, it’s worth noting that like Bitcoin, Ethereum also sees a setup of declining volume and falling price. This might be the market ridding itself of the weak hands before a surge of bulls enters the fray. If they do, ETH will need to take out the $2,000 level.
Cryptos to Watch: Tether (USDT-USD)
Over the past several months, I warned investors to be careful about too much exposure to Tether (USDT-USD) and other stablecoins. While they offer conveniences, we’ve seen the devastating impact of blockchain projects going sour. Often, investors lose access to their cryptos or an underlying asset goes to zero. While I’m not suggesting that this will happen to Tether, it’s not an impossible event.
Recently, The Wall Street Journal noted that several companies backing USDT used falsified documents and shell companies to help its issuing enterprise stay connected to the traditional financial system. Interestingly, per the WSJ, the U.S. Department of Justice has been investigating Tether. To be sure, it might not be the looming catastrophe it appears to be. Nevertheless, investors need to keep their wits about them.
Moreover, if cryptos don’t rise in value significantly and instead meander aimlessly, the risk of holding USDT increases substantially. While Federal Reserve Notes may be boring, at least they’re backed by the U.S. government. With Tether? Who really knows?
Ahead of the proper Monday morning session (that is, when everyone’s awake), BNB (BNB-USD) found itself in a similar situation to the top two cryptos, only worse. In the past 24 hours, BNB dropped around 1.6% of market value. Over the past week, it fell by approximately 6.5%. Not surprisingly, its chart pattern looks uglier than either Bitcoin or Ethereum.
Running a common theme to other cryptos, BNB dipped below its 50 DMA, which stands near $308. However, at a price of $286, BNB essentially straddles its 200 DMA. Presumably, then, it needs encouraging economic data – or more specifically what the Fed considers encouraging – to kickstart its engine.
Unfortunately, BNB finds itself in the awkward position of underlining the Binance exchange. Given the myriad failures and collapses of blockchain projects, BNB struggles with a credibility challenge. Compared to other cryptos, it may incur greater volatility.
Hours before the opening bell on Wall Street, Cardano (ADA-USD) incurred a more volatile ride relative to other cryptos. In the past one-day period, ADA dropped almost 2% of market value. Further, in the trailing week, Cardano slipped slightly over 8%. Historically, ADA printed much uglier charts compared to many other digital assets and the same theme returns.
Priced at a little over 33 cents, ADA declined conspicuously below both its 50 and 200 DMAs, which effectively merged at the moment at 37 cents. In addition, the pace of the negative trajectory suggests that more downside could be waiting. Therefore, if you must invest in cryptos, you may want to consider higher-probability ideas than Cardano.
To be sure, ADA enjoys the framework of declining volume and falling price, supposedly a bullish setup. But to repeat, the pace of value erosion is severe, making me doubt the framework’s relevance. That said, for the bulls to regain control of Cardano, it must take out the 40-cent level at minimum.
Another heavy underperformer compared to other cryptos, early Monday morning, Polygon (MATIC-USD) declined by a little over 1% in the trailing 24 hours. However, the real damage came over the past week, shedding nearly 11% of market value. No other digital asset in the top 10 by market cap saw such an erosion.
Still, there might be a modest degree of hope that MATIC can pull it together. At $1.13 a pop, Polygon slipped beneath its 50 DMA, which stands at $1.19. On the flip side, its 200 DMA sits at 94 cents, so MATIC enjoys about a 27% cushion. If the bulls can quickly come in and build support, MATIC may be able to salvage something from the volatility.
Should this be the case, bullish investors need to see Polygon at a minimum build a baseline of support at $1.40. On paper, this shouldn’t be overly difficult. In February, it hit a high of nearly $1.57. Of course, that was a brief blip. This time, it has to build a bridge.
Previously branded as one of the Ethereum killers back during the bull run of 2021, Solana (SOL-USD) finds itself struggling for oxygen. Early Monday morning, SOL had lost over 2% of market value in the past 24 hours. And in the trailing week, SOL slipped 9%.
Making matters worse, SOL at the time of writing trades hands for a bit below $21. Unfortunately, both its 50 and 200 DMAs converged around the $23 price point. Therefore, the first order of the day is to get back above $23. Otherwise, the bears would smell blood in the water.
In fairness, Solana prints a familiar pattern by now: declining volume, and falling price. Under the discipline of technical analysis, this dynamic implies a weeding out of weak hands. Moving forward, the bulls can enter in force, driving SOL much higher.
That’s the theory. Right now, things aren’t looking too hot. At a minimum, the bulls need to see a baseline develop at $30. Otherwise, Solana may be a sideline asset for now as you concentrate on higher-probability cryptos.
On the date of publication, Josh Enomoto held a LONG position in BTC, ETH, USDT, and ADA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.