After delivering some surprisingly robust gains – following a regional banking crisis, no less – cryptos struggled to gain traction. Some observers pointed to a tougher regulatory environment for digital assets in the U.S. Others called into question the stability of so-called stablecoins undergirding the countless transactions involving virtual currencies. Frankly, the sector is rife with speculation but with few reassurances of where the sector will decisively head.
Technically, the fact stands that throughout much of April, bullish traders attempted to push the total market capitalization of all cryptos to the $1.29 trillion level and beyond. However, data from Coinmarketcap reveals that advocates of virtual currencies got close – darn close. Unfortunately for them, they couldn’t quite breach that psychological milestone.
At the moment, the total market cap sits at a little over $1.15 trillion. However, between March 17 through April 10, the support baseline started from $1.15 trillion at just under $1.19 trillion. Therefore, in order to maintain positive technical momentum, the bulls must push for the latter price point. Below are key virtual currencies to watch this week.
Printing one of the more remarkable performances among cryptos or any other publicly traded asset class, Bitcoin (BTC-USD) during the heat of the U.S. regional banking crisis seemed destined to fall well below the $20,000 level. However, traders aggressively rejuvenated the BTC market, sending prices to and above 30K. Nevertheless, we’re now at another crossroads, with BTC sitting at around $27,440.
What’s peculiar about this level is that it coincides with Bitcoin’s 50-day moving average. Generally speaking, the 50 DMA historically provided support for BTC but it doesn’t always “work.” Otherwise, if it did, the implosion of 2022 wouldn’t happen. Therefore, investors will want to be cautious about interpreting the meaning behind the moving averages.
Another factor to monitor closely for BTC and other cryptos is the relationship between price and volume. As I’ve mentioned earlier, since roughly mid-March, Bitcoin’s price increased while volume faded. Ordinarily, you’d like to see rising volume confirm rising prices. Ultimately, investors will want to be vigilant at this juncture.
Suffering some steep losses recently relative to other cryptos, Ethereum (ETH-USD) gave up nearly 13% of market value in the trailing seven days. In contrast, Bitcoin slipped almost 8% during the same period. What appeared to be a promising run to $2,100 and beyond proved rather ephemeral. Quickly, ETH gave up the psychologically significant support line of 2K. At the moment, the coin trades hands at approximately $1,831.
Similar to Bitcoin’s situation, Ethereum’s price coincides with its 50 DMA. Again, on a historical note, the 50 DMA provided support for ETH. However, when faced with extraordinary macro events – such as the blistering inflation of 2022 – the moving averages become relegated to traffic cones at Le Mans. Therefore, you don’t want to place too much meaning behind them (though they can be useful markers).
Moving forward, investors should continue to monitor the price-volume relationship. Just like Bitcoin, around roughly mid-March, Ethereum started to swing higher in earnest. However, its volume trended generally lower. Without volume confirming the price, it appears only the weak hands kept valuations of cryptos aloft, resulting in a correction.
With cryptos encountering another batch of resistance again, investors may want to consider the risk-reward proposition of Tether (USDT-USD). A stablecoin or digital asset-backed on a stated ratio against a hard currency (usually the dollar), Tether may be the most important virtual currency as far as traders are concerned. Basically, it provides the grease to keep the crypto ecosystem running smoothly.
On a fundamental basis, Tether and its ilk provide convenience and value storage. Because transactions between cryptos and fiat currencies take time and may incur regulatory protocols, it’s more convenient to have wealth stored in the form of digital assets. That way, you can actualize opportunities in real-time. However, should the underlying stablecoin implode for some reason, you’re up the proverbial creek without a paddle.
As The Verge pointed out, a worrying proportion of all stablecoins created since 2015 failed. And in the world of cryptos, failure means absolute. You can’t cry to the Federal Deposit Insurance Corporation (FDIC) because it won’t give a creek. I don’t say this to dissuade you away from Tether completely. Nevertheless, it’s important to understand the risks involved and how much you’re willing to sacrifice for convenience’s sake.
Standing among the most popular alternative cryptos or altcoins, Cardano (ADA-USD) enjoys a strong following. Unfortunately, for quite some time, its performance lagged behind its peers. Recently but prior to the latest correction, ADA performed exceedingly well. Sadly, this too represented a fleeting affair. In the past seven days, the coin lost 14% of its market value.
Near the end of March, the 50 and 200 DMAs converged with the spot price of Cardano. An odd setup, ADA appeared headed for trouble. However, an extraordinary rush of bullish sentiment entered the space. Ultimately, traders pushed the coin to a hair above 46 cents during the mid-April session. Since then, ADA has not looked the same, falling down to a bit above 38 cents.
Interestingly, Cardano’s 50 DMA now sits at 37.5 cents. Further, its 200 DMA hangs below 35.1 cents. Ideally, you’d like to see the bulls come in and bounce ADA higher from its 50 DMA. Unfortunately, the volume has been fading over the past 10 sessions, possibly presenting a warning to investors.
Though earning a reputation as a fun-loving community, the losses that Dogecoin (DOGE-USD) recently incurred represent serious business. Though in the past 24 hours since the wee hours of Tues. morning, DOGE only dipped about 0.2%, in the trailing week, it gave up more than 15% of market value. While that might not deter hardcore Dogecoin investors, prospective participants should be cautious.
After an impressive though disjointed rally, DOGE suddenly collapsed during the April 19 session. Mimicking the volatility of other cryptos, the meme coin fell straight through its 200 DMA, which presently stands at 8.3 cents. Interestingly, DOGE’s price at the time of writing coincides with its 50 DMA (about 7.9 cents).
Here too, volume trended down significantly since the April 3 session, presenting an ambiguous outlook for DOGE. To regain immediate confidence in the space, bullish investors will need to push the price to 8.5 cents quickly. Otherwise, given the volatility of Dogecoin, it could retest soft support at 7 cents.
Slotting into the ninth spot among the top cryptos by market cap, that’s about where the good news ends for Polygon (MATIC) recently. In the trailing 24 hours, MATIC slipped nearly 3%. In the trailing one-week period, the coin gave up almost 18% of its market value. While its multi-chain system (i.e. the internet of blockchains) offers fundamental relevance, this mattered little to traders.
Indeed, if it were up to me, I’d issue a red alert on Polygon, warning investors that the time to mitigate risk might be nigh. Unlike other cryptos, MATIC’s chart profile looks decidedly ugly. Just a few days ago, MATIC traded hands above its 50 DMA, which presently stands at $1.11.
Sadly, in recent sessions, it simply cratered, accelerating to and below its 200 DMA ($1.01). At the time of writing, MATIC sits at 96 cents. Therefore, it’s absolutely essential that the bulls push the coin above its 200 DMA quickly. Otherwise, no logical support line exists until around 80 cents.
An altcoin that quickly gained popularity within the blockchain community, Solana (SOL-USD) in more auspicious days appeared as a viable alternative to Ethereum. Basically, as Ethereum expanded, the fees required to work in the system became onerous. With Solana, a key benefit was that it would not surprise its users with increased fees and taxes. The protocol implements a design that assures low transaction costs while guaranteeing scalability and fast processing.
Unfortunately, the fundamentals again failed to matter to investors in recent sessions. In the past 24 hours, SOL slipped nearly 2%. During the past week, Solana gave up almost 17% of its market value. Turning to the charts, however, SOL offers much more confidence than Polygon or other embattled cryptos. Priced at just under 21 cents, SOL’s 50 and 200 DMA converged at the current level.
At the moment, investors probably shouldn’t panic. A clear horizontal support line exists at a little over 20 cents. Solana appears to be holding this point well. Still, whether it makes forward progress from here is another question. The answer might arrive in the form of key earnings disclosures and economic reports.
On the date of publication, Josh Enomoto held a LONG position in BTC, ETH, and USDT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.