Although the cryptocurrency market got off to an encouraging start in the first half of the year, many individual cryptos to watch have printed much red ink in the second half. At the beginning of July, the total market capitalization of all virtual currencies hit about $1.2 trillion. Right now, this statistic is down to $1.05 trillion.
Fundamentally, much of the uncertainty clouding cryptos to watch focuses on the Federal Reserve. While policymakers last week attempted to paint an encouraging framework, they left the door open for one more rate hike before year end. In addition, inflation remains stubbornly high so it’s no guarantee that the central bank’s hawkish policy will end in 2024.
Further, investors interested in cryptos should at least consider what institutional traders are doing with their money. For example, in July, big block traders bought a significant volume of call options for mining enterprise TeraWulf (NASDAQ:WULF). However, as August started to turn negative, several major traders began selling (writing) calls.
That could be a signal that those who were initially bullish are now bearish. In other words, it’s time to read the room when it comes to cryptos.
Cryptos to Watch: Bitcoin (BTC-USD)
Priced at nearly $26,300 during Tuesday’s early morning session, Bitcoin (BTC-USD) is once again looking at possibly another frustrating week. In the trailing 24 hours, BTC gained about half a percent. However, during the past one-week period, the benchmark of all cryptos gave up a bit more than 2% of market value. Currently, its market cap comes in at $512.4 billion.
On the technical front, Bitcoin needs to break out of its sideways consolidation that began around Aug. 18. This session followed a severe decline from when BTC trading above the $29,000 level. Subsequently, the lead virtual currency has struggled mightily to break out of the $26K price zone.
What’s particularly noteworthy is that Bitcoin’s 50-day moving average appears to have imposed upside resistance. On Sept. 19 and 20 when BTC attempted to move past the $27K ceiling, the level coincided with the 50 DMA. Unfortunately, the bulls did not have enough strength to mount a sustained effort.
To be sure, it’s unlikely for BTC to just tread sideways. Thus, investors should approach the arena vigilantly.
Ethereum (ETH-USD)
While Bitcoin didn’t exactly fare well in the past week, Ethereum (ETH-USD) investors would likely take that performance rather than what we’re left with in ETH. On paper, the near-term stats don’t seem particularly problematic. In the 24 hours, Ethereum gained a bit more than half-a-percent while in the past week, it slipped 3%.
However, the broader technical profile does not bode well for the number two among all cryptos. Priced at $1,589 a pop, Ethereum sits well below its 50 DMA (at $1,673) and its 200 DMA ($1,803). More worryingly, following the August selloff in blockchain assets, ETH’s price action has been tilting negatively. This shape contrasts with Bitcoin’s flat consolidation post the August volatility.
Now, one possible respite for Ethereum comes with its relationship between volume and price. As I’ve stated before, a noticeable trend for cryptos has been fading volume. However, when volume fades in conjunction with a declining price, the setup could be bullish for the underlying asset.
Still, that’s a bold bet that arguably goes against broader dynamics. Thus, I would be extremely cautious.
Cryptos to Watch: Tether (USDT-USD)
One of the main challenges with decreasing volume among cryptos is that they impact stablecoins like Tether (USDT-USD). Pegged on a one-to-one basis with the dollar, Tether doesn’t cater to your typical motivation for buying digital assets; that is, to attempt to secure (robust) capital gains. Rather, USDT represents a form of wealth storage and a means of convenience.
To put it simply, if traders identify an opportunity in blockchain assets, they can respond right away if they have Tether. On the flipside, if they only have fiat currencies, then a conversion from fiat to cryptos must take place before advantaging said opportunity.
Now, under decisively bullish market conditions for virtual currencies, USDT makes plenty of sense. However, in a fading volume environment, stablecoins lose their luster. Stated differently, you’re absorbing a lot of risk by committing to long periods of stasis, which can be nerve wracking.
You can say what you want about the greenback. Chances are, it’s not going anywhere. Unfortunately, the same level of confidence doesn’t apply to Tether.
BNB (BNB-USD)
For those interested in understanding the psychology of cryptos, BNB (BNB-USD) could be instructive. At the moment, it’s trading similar to other major digital assets. In the trailing 24 hours, BNB popped up about 1.3%. However, in the past week, the coin slipped more than 2%, reflecting broader frustrations in the blockchain ecosystem.
What’s truly interesting with BNB is how its 50 DMA appears to set the tone for future price action. For example, in May to early June, the 50 DMA symbolized upside resistance, eventually leading to a sharp downturn. Later in August, the moving average converged down onto BNB’s price action, almost daring it to pop higher. As history shows, it did not.
Another factor to watch is BNB’s relative strength indicator (RSI). During the aforementioned two downcycles, the RSI fell into oversold territory. However, clearly that status alone did not guarantee subsequent upside. Instead, the successive price action has been disappointing. To be sure, many critics point to technical analysis as voodoo. Still, with cryptos, it’s voodoo to pay attention to.
Cryptos to Watch: XRP (XRP)
One of the more intriguing cryptos for hardcore believers, XRP (XRP-USD) recently printed a rags-to-riches-back-to-rags tale. As has been covered by multiple media outlets, XRP soared when its creator Ripple Labs achieved a significant legal victory. To make a long story short, the U.S. Securities and Exchange Commission (SEC) accused Ripple of skirting securities laws with XRP distributions.
That a federal judge determined that XRP was not a security appeared to give legal precedent to the cryptocurrency. Sadly for crypto proponents, however, that’s not the end of the dispute. Indeed, the SEC expanded its crosshairs to target other popular blockchain and crypto enterprises. So, Ripple may be forced into a battle of attrition.
What’s notably here is that while XRP has been incredibly choppy with its rollercoaster ride, it has also generally printed a series of rising lows. Frankly, that’s a much more encouraging backdrop than you’ll find in many other (perhaps most other) cryptos. Therefore, XRP could be a buy for the patient speculator.
Cardano (ADA-USD)
Though ranking among the more popular cryptos, Cardano (ADA-USD) represents a split narrative. As one of the original altcoins, ADA deserves plenty of credit for consistently listing within the top 10 decentralized assets by market cap. Right now, it comes in at number seven with a value of $8.63 billion. There are many other altcoins that haven’t had the lasting success of Cardano.
On the other hand, Cardano is also incredibly disappointing for speculators. As an example, Bitcoin gained almost 59% of market value since the January opener despite its tumultuous run. In sharp contrast, Cardano slipped 1.5% during the same period. Notably, during the past half-year period, ADA gave up 31%.
Unsurprisingly, ADA prints an ugly technical chart. Priced at just under 25 cents, the crypto coin sits below its 50 DMA (26 cents) and its 200 DMA (32 cents). Similar to Ethereum, the price action tilts downward, necessitating bullish intervention to prevent further damage.
As with ETH, Cardano sees volume and price declining, which could be a contrarian indicator. Just know that I’ll be cheering from the sidelines.
Cryptos to Watch: Dogecoin (DOGE)
Although a decentralized asset that started off as a joke, Dogecoin (DOGE-USD) is really no laughing matter. Right now, DOGE occupies the number eight slot in terms of total market cap, a stunning achievement if you think about it. Carrying a market cap of just under $8.6 billion, it could conceivably surpass Cardano on the top 10 list.
However, it’s also one of the more volatile cryptos. In the trailing 24 hours, Dogecoin came in a hair below parity. During the past seven days, Dogecoin lost more than 2% of market value. What’s more problematic for the digital asset is its weak chart performance. Trading hands at 6.1 cents, DOGE sits below both its 50 DMA (6.5 cents) and 200 DMA (7.2 cents).
Moving forward, I suppose that speculators will be banking on the price action and volume relationship. Just like Ethereum and Cardano, DOGE sees fading price and fading volume, which may indicate an upside swing. Again, that’s a massive risk because the concept flies against broader economic conditions.
Still, it’s ultimately up to you to decide.
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.
