At some point, the fundamentals eventually matter, which may be the lesson for the week regarding cryptos. After rebounding impressively from mid-June – when the total market capitalization of all virtual currencies was just above the $1 trillion level – the sector enjoyed newfound momentum, trading roughly around the $1.2 trillion valuation point. However, the bulls need to figure out what to do next.
Last week, cryptos hit a total value of $1.26 trillion, the highest point the blockchain asset market reached since the second half of April. Generally, though, digital assets don’t like to stay rangebound for too long. Much of the excitement of this space centers on its mobility. Basically, big moves in either direction open windows of opportunities for speculators to jump in and start making serious money.
However, what has likely clouded some of the upward mobility in cryptos in the past few weeks may be the Federal Reserve. At the next meeting for the central bank’s policymakers, it’s possible that they could raise the benchmark interest rate.
Inflation is moving in the right direction, as I mentioned in a CGTN America interview. Unfortunately, the Fed still has a long ways to go, likely impacting the below cryptos.
Bitcoin (BTC-USD)
As the alpha wolf within the cryptocurrency pack, Bitcoin (BTC-USD) commands the most attention and influence. Heading into the closing hours of Monday, Bitcoin finds itself down about 0.6% in the trailing 24 hours. Over the past seven days, BTC slipped more than 1%. At time of writing, the original blockchain asset carries a market cap of $585.4 billion.
Looking ahead, the leader of all cryptos prints an ambiguous framework. When BTC surged on the June 20 session, it broke through its 50-day moving average which had previously acted as upside resistance since May 8. As well, it was encouraging that the coin didn’t drop down and test support at its 200 DMA. Nevertheless, since June 23, Bitcoin has been running sideways and its recent weak performances haven’t inspired confidence.
Interestingly, BTC at around $30,132 is steadily closing in on its 50 DMA, which clocks in at $28,725. Depending on upcoming economic data – such as initial jobless claims and housing starts – Bitcoin trading may be relatively muted. I’d watch the 50 DMA closely as that support line must hold.
Ethereum (ETH-USD)
Featuring a more exciting profile among the elite cryptos, Ethereum (ETH-USD) has been all over the map recently. Moving rapidly toward midnight, Ethereum ended up dropping close to 1% of market value in the past 24 hours. However, in the trailing seven days, ETH gained almost 2% of value. At time of writing, the second-most valuable virtual currency carries a market cap of $229.4 billion.
On the technical chart, Ethereum is taking stakeholders on a ride, plain and simple. As with Bitcoin and other cryptos, ETH bounced higher around mid-June, briefly touching its 200 DMA. On June 21, the number two coin broke above its 50 DMA. Since then, it’s been trying to decisively break above the $2,000 level but failing to hold.
Fortunately, its 50 DMA (which currently stands at around $1,854) has acted as strong support. For Ethereum to have a short at another near-term rally, this level must hold. Still, conservative investors may want to be cautious about making aggressive moves as ETH presently trades on low volume.
Tether (USDT-USD)
Still the number three blockchain asset by a comfortable margin, Tether (USDT-USD) at time of writing commands a market cap of $83.8 billion. As a stablecoin or decentralized asset pegged to a hard currency, Tether doesn’t offer the typical approach to wealth generation associated with cryptos: buy certain appealing assets and hope they move higher for whatever reason. Instead, the narrative here largely centers on convenience.
By having wealth stored in Tethers (or similar cryptos), traders can respond immediately to opportunities that develop in the market. In contrast, those that hold wealth in say dollars may have to go through a time-consuming fiat-to-crypto conversion.
Another benefit to acquiring Tether is that they can earn interest through staking their USDT in a supporting platform. This approach to passive income compels but also carries risks.
As this year’s regional banking crisis demonstrated, the backing of USDT comes from “paper” assets. And those assets can fall under pressure in the real world, thus impact cryptos in the decentralized ecosystem. Be aware of this dichotomy before plunking real dollars into digital ones.
XRP (XRP-USD)
It’s the news that got folks talking excitedly about cryptos again. Last Thursday, Reuters reported that Ripple Labs did not violate federal securities laws by selling XRP (XRP-USD) tokens on public exchanges. That’s according to a federal judge presiding over the case involving Ripple and the U.S. Securities and Exchange Commission (SEC). As the news agency stated, it’s a landmark legal victory for cryptos that naturally sent XRP soaring.
Further, Reuters stated that the case represented a first win for a virtual currency-related enterprise which caught the ire of the SEC. Nevertheless, it wasn’t a complete victory for Ripple as the court ruled that the company’s $728.9 million of XRP sales to hedge funds and other sophisticated buyers amounted to unregistered sales of securities.
Still, the overriding assessment was that among retail investors, XRP trades represented “blind bid/ask transactions.” Notably, Coinbase (NASDAQ:COIN) has indicated that it would like to relist XRP.
Although cryptos presently operate under a contested arena due to Fed-related concerns, XRP seems intriguing because of the legal clarity. It’s certainly a name to watch closely.
Solana (SOL-USD)
Outside of XRP among the top 10 cryptos by market cap, Solana (SOL-USD) posted the biggest gain over the past seven days, soaring 23%. Frankly, SOL represented one of the assets that could use whatever good news it got. Earlier this month, Solana struggled to get past the resistance imposed by its 200 DMA, which happened to cross above the 50 DMA. The bulls needed to make a strong statement and it did just that.
After popping to over $32 last Friday, SOL has given considerable ground. Just in the past 24 hours, Solana slipped almost 6%. Nevertheless, it’s in a much better position than it was last month, when investors had justifiable concerns that the coin could plunge to multi-month lows. Instead, it could potentially build a higher baseline of support. If so, Solana offers an enticing profile for speculators.
That’s not to say that the road will be an easy one because it probably won’t be. Ideally, the next target for SOL is the $32 level, which represents strong horizontal support. However, that’s about a 20% move from here, which might be challenging given the broader fundamental picture.
Cardano (ADA-USD)
A tremendously popular name among alternative cryptos or altcoins, Cardano (ADA-USD) has shown flashes of promise this year after a horrid time in 2022 as the Fed aggressively implemented its hawkish monetary policy. However, like many other virtual currencies, ADA has been all over the map. In the trailing 24 hours, ADA slipped more than 3%. However, during the past week, it gained almost 7% of market value.
Last week, I mentioned that it appeared ADA was printing a wedge pattern with a flat top. Seemingly, the flat top symbolized stout bearish resistance, preventing Cardano from gaining new ground. However, on Thursday – coinciding with the Ripple announcement – ADA skyrocketed. Unfortunately, it appears that the sentiment tied to the legal breakthrough has worn off. If so, investors need to be extremely cautious.
Basically, ADA must hold above the 30-cent line which is where its 50 DMA roughly sits. If it falls below this point, we’re right back where we left off last week, with the flat top of the wedge pattern imposing upside resistance.
Dogecoin (DOGE-USD)
Ever the lovable meme coin, Dogecoin (DOGE-USD) often divides opinion, with purists of cryptos labeling it as silly, stupid fun while other folks really embrace the DOGE ecosystem. No matter where you fall in the spectrum, one thing stands clear: Dogecoin warrants respect. At the moment, the speculative coin carries a market cap of $9.8 billion.
Over the past 24 hours, DOGE slipped 1%. However, in the trailing seven days, it gained just under 7% of market value. Moving forward, the coin must break above frustrating technical clouds. For example, Dogecoin at 7 cents finds itself sandwiched between the 200 DMA (7.7 cents) and the 50 DMA (6.7 cents). Ideally, Dogecoin bulls should attempt to drive the price to 7.5 cents, where strong horizontal support lies.
From there, the next big-ticket goal is 12 cents. That’s a bit of a tall order considering that the Fed could easily unwind speculative fervor with higher interest rates. Still, what’s encouraging is that Dogecoin is slowly building off the momentum driven by the Ripple announcement. It’s worth keeping an eye on.
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.
