While cryptos may be flying right now, the main catalyst could be speculation, which presents an ambiguous framework. According to CoinDesk, the ratio between the leading virtual currency’s daily trading volumes in spot and derivatives markets fell to an 11-month low. Per the blockchain-centric publication, this dynamic signals renewed speculative activity in digital assets.
Earlier, blockchain proponents argued that the surge in interest toward cryptos stemmed from a fundamental catalyst; that is, diversification out of the dollar and away from bank credit risks bolstered digital assets. However, Markus Thielen, head of research and strategy at Matrixport, pointed out that this thesis might be standing on weak ground if indeed speculation (i.e. leverage) represented the core price motivator.
From a logical perspective, it’s difficult to imagine that investors at large will find safety from risk by putting their money into one of the riskiest market categories available. That said, traders may also be placing bets ahead of critical economic data that may determine the trajectory of monetary policy. One thing’s for sure: there are no boring days in the blockchain. Below are seven cryptos to watch.
Cryptos: Bitcoin (BTC-USD)
Easily the highlight among cryptos, Bitcoin (BTC-USD) gained over 6% in the trailing 24 hours late Monday evening to reach a price of just over $30,000. In the past seven days, BTC moved up 8%. Currently, it commands a market capitalization of just under $582 billion.
Technically, Bitcoin broke out of its “megaphone” pattern that started in late Jan./early Feb. of this year. In many cases, the megaphone implies chaotic pricing action that culminates in downside price action. However, from the second half of March, BTC managed to post a sideways trading range between $27,000 to $298,000. Despite the low volume, BTC swung higher, breaking above a key psychological level.
With BTC hitting a weekly average high of approximately $67,550, the next natural target would be the 50% Fibonacci retracement or $33,775. From the present juncture, this would imply only a 13% move higher, which is easily doable for cryptos. However, investors must also watch the volume trend. With volume still generally declining since mid-March, traders should approach cautiously.
Cryptos: Ethereum (ETH-USD)
Enjoying a solid run alongside other cryptos, Ethereum (ETH-USD) posted a return of 3% in the past 24 hours. In the trailing seven days, ETH moved up a bit over 6%, driving the price of the asset to $1,918. At the moment, Ethereum commands a market cap of just under $231 million.
Like Bitcoin above, ETH managed to break out of the typically bearish implications of the megaphone pattern. Just as encouragingly, Ethereum trades well above its 50-day moving average ($1,707) and its 200 DMA ($1,459). Based on its weekly average peak price of approximately $4,627, market participants will be targeting its 50% Fibonacci retracement ($2,314).
Here, we’re talking about a 21% lift to reach that target. Usually, that’s no issue for high-flying cryptos. Nevertheless, since mid-March, volume trends have been fading, which implies speculative fervor is driving Ethereum (as opposed to fundamental catalysts). Therefore, investors should be cautious about their approach.
Cryptos: Tether (USDT-USD)
As a stablecoin or virtual currency pegged to a hard currency (usually the dollar), there’s not much to say about Tether (USDT-USD) and its market value. Either you can trade one USDT for one dollar or you can’t. So far, USDT stayed within a range of 0.9999 to 1.0008 to one dollar during the past week.
Nevertheless, one factor to consider for Tether moving forward is its acquisition volume. Most recently, USDT saw a huge spike in buy volume on March 11 according to data from Stockcharts.com. Since then, volume activity has been limited despite significant mobility in cryptos.
While I’m not about to tell you what to do with your money, it probably doesn’t hurt to reassess one’s exposure to stablecoins right now. For example, if banks can’t be trusted, the operators or administrators of stablecoins shouldn’t be trusted either. Even though this segment of cryptos is winning now, there are plenty of shadowy dealings going on here.
Despite weathering some broader questions regarding viability, BNB (BNB-USD) – the digital asset undergirding the Binance crypto exchange – managed to post solid returns recently. In the past 24 hours, BNB gained almost 5%. In the trailing seven days, the coin moved up nearly 6%.
Although the undulations of BNB can easily make risk-averse investors seasick, it’s also one of the more resilient cryptos. I use “resilient” as a relative term, of course. Objectively, though, BNB finds itself above its 50 DMA ($310) and 200 DMA ($293), which represents a decent accomplishment. Overall, BNB hit a peak weekly average price of nearly $672 in May 2021.
Using the principles of Fibonacci retracements, investors’ next logical target would be $336. That’s less than a 3% move from its current price point of $327. Assuming BNB reaches that threshold, bulls will next target the 61.8% retracement level, which stands at just over $415. As a 27% lift from here, that’s going to be a challenge, particularly as BNB also suffers from low volume. Thus, it’s worthwhile to be patient.
A surprisingly robust name among cryptos, Cardano (ADA-USD) would be my choice for the top highlight of the week following Bitcoin. On paper, the performance might not be that impressive. In the past 24 hours, ADA gained 4%. In the trailing week, it moved up less than 3%. Still, it managed to print slow and steady gains since hitting a bottom on March 11.
Presently, ADA trades hands at a little over 40 cents. That’s conspicuously above its 50 DMA (36 cents) and 200 DMA (35.3 cents). With these moving averages no longer acting as resistance barriers, Cardano appeared to enjoy some freedom. Nevertheless, the cautionary points for other cryptos also apply to ADA; namely, declining volume trends. Since the early days of March, Cardano’s price steadily increased while its volume levels gradually faded. Ideally, you’d like to see volume confirm the price action.
Notably, Cardano hit a peak weekly average price of $2.97. Therefore, its 50% retracement level is $1.49, a steep challenge. A more realistic (but still lofty) target is its 38.2% retracement at $1.13.
While the intense fervor of meme coins might no longer attract the news cycle like it once did, Dogecoin (DOGE-USD) continues to hold its own. In the past 24 hours, DOGE gained nearly 2% of its market value. To be fair, in the past week, it slipped more than 11%. However, that was due to the collapse of a sharp spike rally. Overall, the trend of higher lows printed since early March remains intact.
Conspicuously, despite the wildness of its price action, Dogecoin currently trades above its 200 DMA (8.1 cents) and 50 DMA (7.8 cents). Famously, DOGE reached a peak weekly average price of about 58 cents in May 2021. Therefore, a 50% retracement would take the coin to 29 cents. That’s an optimistic target considering the current price of 8.5 cents.
A more realistic (but again incredibly steep) target would be the 38.2% retracement, which implies a price of a little over 22 cents. Given the extreme volatility of DOGE, investors may want to see some key economic data first before plowing ahead.
On paper, Solana (SOL-USD) benefitted quite handsomely relative to other cryptos because of Bitcoin’s surge. In the past 24 hours, SOL gained just a hair under 10%. In the trailing one-week period, it gained 9% of market value. Presently, Solana features a market cap of $8.69 billion, making it the tenth most valuable digital asset.
Just minutes before the swing higher, Solana was fighting for credibility. Again, prior to the bullishness, SOL traded hands around where its 50 and 200 DMAs converged (approximately $21). Now, it’s up over $22, coinciding with a slight uptick in volume. Nevertheless, Solana needs to keep the momentum going. Here, volume trends have been declining since Jan. Therefore, to keep would-be investors motivated, SOL needs a couple of outstanding sessions.
Long term, Solana hit a peak weekly average price of nearly $259 in November of 2021. Therefore, a 50% retracement would imply hitting $129.50, an incredibly challenging target. A 38.2% retracement implies just under $99, which is still quite ambitious. As with other cryptos, investors should exercise caution.
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.