Following the immediate shock of the banking crisis, cryptos fundamentally had their moment to shine. While the total market capitalization of all virtual currencies slipped to a little over $914 billion on March 10, the blockchain sector immediately bounced higher. At its peak in early April, digital assets combined for a total valuation of nearly $1.29 trillion.
On the surface level, as Investopedia pointed out, blockchain proponents long argued that cryptos can replace fiat money. With the banking system appearing to fracture, virtual currencies couldn’t have asked for a better organic marketing opportunity. However, such thinking runs into a logical problem. Basically, the existence of an alternative solution does not necessarily mean that it’s a superior protocol or mechanism.
Interestingly, in the past month, the total market cap of all cryptos fell about 11%. In contrast, the iShares US Regional Banks ETF (NYSEARCA:IAT) declined approximately 13%. Put another way, the narrative about cryptos offering an alternative to the fiat banking system isn’t quite panning out. To be sure, this isn’t to say that blockchain-derived digital assets are doomed. However, you should follow the data regarding cryptos, not cute internet memes.
Heading into the Tuesday early morning session, Bitcoin (BTC-USD) found itself down a little more than half a percent in the past 24 hours. In the trailing seven days, BTC dipped over 2%. Conspicuously, BTC – along with other cryptos – struggled of late. In particular, Bitcoin slipped below its 50-day moving average, which presently clocks in at $28,483. As of this writing, the price action slips in and out of the $27,000 level.
Notably, Barron’s warned that traders face a business week that could be light on catalysts. Essentially, cryptos trade alongside the benchmark equity indices in response to economic data, especially regarding monetary policy. Should the Federal Reserve signal a more accommodative policy, this framework could help lift BTC and other digital assets.
For now, it appears that Bitcoin may be in the middle of forming a bearish head-and-shoulders pattern. A fairly quick drop to the 20K level, followed by a rebound to around 25K (but no higher) could confirm the materialization of the chart formation. Overall, investors need to approach BTC with caution.
As with Bitcoin above, the number two virtual currency by market cap Ethereum (ETH-USD) isn’t faring that much better heading into the Tuesday morning session. In the past 24 hours, ETH suffered a loss of nearly 1%. In the trailing one-week period, the coin suffered a nearly 2% hit. Currently, Ethereum trades hands at a little over $1,800. That’s significant because its 50 DMA stands at $1,884.
Again, a lack of meaningful upside catalysts might hinder ETH and similar cryptos. In addition, Ethereum may struggle with rising concerns about government regulation. Given the wild volatility associated with blockchain-based digital assets, Uncle Sam has little reason to play nice with the sector.
Also, in a nod to Bitcoin’s price chart, the Ethereum chart also suggests that the coin is in the middle of forming a bearish head-and-shoulders pattern. Should a quick drop to $1,400 or so followed by a rise to around $1,700 materialize, we could be looking at another warning sign developing. Therefore, investors should adopt a cautious mindset.
As a possible counterweight to the soft market session among cryptos recently, Tether (USDT-USD) has experienced a decline in investment outflows since the Terra Classic (LUNC-USD) collapse – which at the time was known as Terra Luna. Put another way, fewer USDT stakeholders are redeeming their stablecoin units for fiat currencies, according to FXStreet.
Fundamentally, Tether and related cryptos offer a convenient mechanism of wealth storage. Rather than constantly converting U.S. dollars into virtual currencies to advantage potentially profitable trading patterns in the blockchain ecosystem, stablecoins allow investors to hold their wealth in crypto assets. That way, when an opportunity arises, investors can respond instantly without having to deal with the aforementioned conversion process.
Of course, during periods when the blockchain suffers a credibility crisis, holding real wealth in digital assets poses obvious risks. Therefore, more people are apparently willing to trust stablecoins represents a positive for cryptos. Nevertheless, investors should consider core macroeconomic realities before making a significant decision.
One of the more promising cryptos on a relative basis, BNB (BNB-USD) dipped around half a percent in the trailing 24 hours ahead of the Tuesday morning session. In the past one-week period, it lost roughly 0.6%, which isn’t that bad considering the damage seen in other assets. Still, it has some work to do to establish credibility, along with other virtual currencies.
As Cointelegraph pointed out, the $300 level has proven to be strong support. At the moment, the longer-term 200 DMA sits just several cents above $300. On the other hand, BNB trades hands at under $313, forming a moving-average sandwich with the 50 DMA standing at $321.
For the bulls, the immediate goal centers on BNB continuing to march steadily forward. However, at some point, it will need to make some larger-scale moves toward the $400 level. If not, the bears will probably attempt to push BNB down to the $275 level as a first logical target. From there, BNB risks falling to $250 without bullish support.
Though one of the more volatile alternative cryptos or altcoins, Cardano (ADA-USD) occasionally pulls some interesting surprises. Heading into the Tuesday morning session, ADA slipped almost 2% over the past 24 hours, a not encouraging development. Yet despite this sharp loss, Cardano managed to gain a hair over parity in the past one-week period.
Currently, the market prices ADA at 36.5 cents, a discount of about 21% since its peak price this year. Its 200 DMA sits right below 35.2 cents, whereas the 50 DMA rose above 39.3 cents. Throughout this year, the 36-cent level has held up well as a broader support line. Therefore, bullish investors will be looking for this price to hold.
Nevertheless, the bulls will need to soon make positive progress to interest onlookers. Here, the natural upside target is 44 cents. It previously acted as support in the back half of last year. This year, the level imposed a resistance line. Breaking it would symbolize a significant display of intent, which could help lift Cardano.
Billed as one of the main competitors to Ethereum, Solana (SOL-USD) ranked among the hottest altcoins of 2021. At its peak, SOL briefly jumped above the $250 level. Unfortunately, that was during November when cryptos decided to implode. Later, in 2022, the combination of blistering inflation and the Fed’s hawkish response devastated Solana.
At the moment, SOL trades hands at just under $21. Here, another sandwiching effect took place, with the 200 DMA coming at $19.77 while the 50 DMA landed at $21.84. On an encouraging note, aside from the occasional spikes and dives, the SOL price averaged around #21. Therefore, the bulls may be establishing a baseline of support.
However, in order to interest those besides ardent blockchain fanatics, Solana needs to do more than just move sideways. Otherwise, it risks a correction down to $18 if not lower. Primarily, investors will be hoping that the support baseline will start moving toward the $25 level. From there, the next logical target will be roughly $31.
While purely speculative assets like Dogecoin (DOGE-USD) don’t always get respect from “serious” investors, they have their charm. Here, the focus centers on having fun and hopefully making a profit along the way. You’re not going to suffer virtue-signaling lectures from DOGE proponents claiming that the blockchain can solve global hunger.
Unfortunately, that charm hasn’t helped Dogecoin inspire confident trading. Compared to many other cryptos, DOGE suffers from a weak technical profile. That’s because trading at 7.2 cents, it sits well below its 50 DMA (at 8.1 cents) and 200 DMA (at 8.4 cents).
Of course, the positive aspect of DOGE is that it can bounce back at a moment’s notice. However, with a lack of substantive news to organically carry Dogecoin higher, the bulls will need to generate momentum themselves. That’s easier said than done.
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.