While the seasonal phenomenon known as Uptober started rather swimmingly for cryptos to watch last week, sentiment appears to have cooled. At the start of the month, the total market capitalization of all virtual currencies stood at around $1.8 trillion. As of Monday night, this stat slipped to $1.07 trillion.
To be fair, investors should avoid assessing the cryptocurrency market on its day-to-day gyrations. Basically, at any moment, these blockchain-derived assets can swing dramatically higher. Nevertheless, it’s also worth pointing out that certain fundamentals don’t necessarily bode well for cryptos. In particular, a hotter-than-expected jobs report presents a tricky narrative.
From one angle, the high print also accompanied wage growth moderation. That right there suggests the Federal Reserve’s aggressively hawkish monetary policy is paying off some dividends. Nevertheless, the face-value interpretation also sticks; that is, more dollars are chasing after fewer goods.
Yes, that might sound great for decentralized assets but remember: the Fed likely won’t tolerate inflation moving higher. So, a continued hawkish approach could be the answer, posing challenges for cryptos to watch.
Cryptos to Watch: Bitcoin (BTC-USD)
As the benchmark of all cryptos to watch, Bitcoin (BTC-USD) commands the lion’s share of attention regarding the blockchain ecosystem. Unfortunately, in recent sessions, BTC is acting more as a harbinger for the virtual currency market than it is a north star. Yes, in the trailing one-month period, BTC gained nearly 7% of market value. However, in the past seven days, BTC has only poked its head above parity.
Technically speaking, BTC’s 200-day moving average (which comes in at $28,039) imposes upside resistance. It’s only briefly managed to swing above the 200 DMA on an intraday basis. Therefore, not much confidence seems to exist for BTC. Another factor to consider is volume. Basically, it continues to be low relative to levels seen during the first quarter of this year.
Subsequently, you’d imagine that Bitcoin bulls must get the price decisively above $28,000. Lingering around the $27,000 level will likely attract skepticism, which could invite a drop to the $26,600 marker, where BTC’s 50 DMA lies.
Ethereum (ETH-USD)
As the number two among all cryptos to watch by market cap, Ethereum (ETH-USD) likewise commands significant interest. Unfortunately, the cracks are beginning to show. In the trailing one-month period, ETH slipped almost half a percent. In the trailing one-week period, ETH gave up more than 5% of its market value, which is a worrying proposition. After all, this is supposed to be Uptober, not “Downtober.”
To be fair, Ethereum remains up almost 32% since the January opener. Yet in the trailing six months, it declined over 17%, requiring the bulls to pick up the slack. This is where I’m getting concerned for near-term viability. Per StockCharts, ETH trades hands at around $1,578, below its 50 DMA (at $1,634) and its 200 DMA (at $1,799).
Volume has also noticeably faded since Q1 of this year. More critically, I don’t like the shape of Ethereum’s chart formation, which sees its price action dangling horizontally in a no-man’s-land. The next level of defined support would be at roughly $1,220, which is obviously a severe drop.
Cryptos to Watch: Tether (USDT-USD)
Structured as a stablecoin, Tether (USDT-USD) distinguishes itself from most other cryptos with its capital gains focus. Instead, the main point about Tether is that it provides a mechanism to “freeze” wealth in the decentralized ecosystem. Mainly, if trading opportunities arise in virtual currencies, investors can jump on them immediately rather than wait for the fiat-to-crypto conversion.
On that note, banks are open during banking hours, which is a problem because cryptos trade 24/7/365. In addition, banks close during all federal holidays, which is frustrating for most of us who live in the “real” world. I mean, at this point, why don’t they just take Cinco de Mayo and Saint Patrick’s Day off too? I jest but I also recognize the motivation behind holding wealth in the blockchain.
That said, I think you should consider being tactically prudent. In February and March of this year, trading volume represented net acquisitions of USDT. In the past half-year period, we’ve seen significant net divestitures. Therefore, you want to be careful about your own exposure to USDT.
BNB (BNB-USD)
While several cryptos continue to benefit from the positive momentum earlier this year, BNB (BNB-USD) represents an exception to the case. Since the start of 2023, BNB has given up more than 15% of its market value. As well, it’s printed some ugly near-term stats. In the trailing one-week period, BNB fell over 4%. And in the past 24 hours, it succumbed almost 3% in the red.
To be sure, those who ardently follow cryptos tend to be a loyal, unflinching bunch. At the same time, it’s difficult to see the silver lining with BNB. Since May, BNB’s 50 DMA has consistently acted as upside resistance. Worse yet, in early June, the coin’s 200 DMA failed to act as support. Even with the passage of time and the Uptober season, BNB has been disappointing.
At a bit over $206, BNB is noticeably below its 50 DMA (at $214) and its 200 DMA ($262). Moreover, volume levels have faded significantly since around the midpoint of this year. Unless the bulls show up – and right quick – BNB may continue to struggle.
XRP (XRP-USD)
Despite the rollercoaster ride that XRP (XRP-USD) has endured, the coin – which can be used for rapid-fire transfers of digital wealth – remains a strong performer overall. Since the beginning of this year, XRP gained about 48% of its market value. Unfortunately, near-term sentiment is fading. In the trailing one-month period, XRP only gained half a percent. And in the past 24 hours, it lost roughly 4%.
In the past, most of XRP’s narrative centered on the founder of Ripple Labs and the lawsuit the U.S. Securities and Exchange Commission (SEC) leveled against it. Now with the SEC fighting against the favorable ruling, XRP has given up most of its prior rally. It’s just trying to stay afloat, which might invite the bears.
Worryingly, XRP’s price action currently takes it below its 50 DMA (at 51 cents) and its 200 DMA (at 53 cents). With the latter moving average historically acting as support, XRP’s dip below the two indicators doesn’t provide much confidence. In fairness, you don’t want to overreact. Still, you also don’t want to ignore the woes XRP finds itself in.
Tezos (XTZ-USD)
While the recent action in cryptos has been decisively negative, that can’t be declared for every digital asset. Case in point is Tezos (XTZ-USD). A blockchain that’s based on smart contracts that spiritually align with Ethereum, Tezos distinguishes itself through its more advanced infrastructure. Essentially, it can evolve and improve over time without the danger of a disruptive hard fork materializing.
In the trailing seven days, XTZ gained a bit over 5% of market value. Also, in the trailing 24 hours, it swung up over 6%. As of this writing, it’s the only virtual currency that is up at least 5% in either performance classification. And that also serves to tell you how rough of a week it’s been for cryptos overall.
Interestingly, XTZ saw its 50 DMA (which currently lands at 68 cents) apply upside resistance against Tezos. However, skyrocketed a few hours ago, sending the price to around 72 cents per unit. If anything, XTZ serves as a lesson that anything can happen with blockchain assets.
Monero (XMR-USD)
A controversial cryptocurrency, Monero (XMR-USD) represents another notable top performer in the decentralized financial ecosystem. Over the past one-week period, XMR gained just under 5% of market value. However, in the past 24 hours, the coin slipped nearly 2%, meaning the price action isn’t quite as robust as Tezos during the same comparison. Also, XMR has been incredibly choppy this year, gaining only 3% since the January opener.
On the surface, Monero doesn’t seem like a particularly noteworthy project. Per Coinmarketcap, Monero aims to allow transactions to take place privately and with anonymity. Now, those attributes don’t necessarily imply nefarious activities. As evidence, the Pew Research Center points out that most Americans are concerned about their online privacy. Still, with anonymity comes the potential for dubious incidents, which is where XMR gains its notoriety.
Fundamentally, I suppose that Monero symbolizes the crypto version of the dark web. Yes, unspeakable crimes occur on this segment of the internet. But a lot of good also stems from going dark. In that light, XMR could be interesting for the long haul as net privacy demands increase.
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.
