Although cryptos to watch have printed a remarkable comeback narrative last month – billed as the seasonal “Uptober” trend – investors now face a conundrum. On one hand, virtual currencies appear poised for further upside thanks to rising credibility. Specifically, if regulators approve a spot-crypto exchange-traded fund (ETF), decentralized digital assets may soar on implied widened participation.
On the other hand, cryptos have recently pulled back following robust gains last week. Per FXStreet, the benchmark cryptocurrency slipped after approaching the $38,000 level ahead of Tuesday’s release of the consumer price index (CPI) report. More importantly, the Federal Reserve stated recently that it won’t hesitate to raise interest rates to ensure price stability.
That right there could be the key catalyst for cryptos to watch. Notably, since January 2022 through October 2023, the relationship between the market yield on U.S. Treasury securities at 10-year constant maturity versus the price of the benchmark blockchain asset pinged an inverse correlation of 52.27%.
Basically, over enough time, higher borrowing costs naturally pressure speculative asset classes. Thus, despite recent good news, you want to be vigilant with the decentralized asset ecosystem.
Cryptos to Watch: Bitcoin (BTC-USD)
During the wee hours of the Tuesday morning session, Bitcoin (BTC-USD) traded hands at $36,664. Per data from Coinmarketcap, it appears that BTC stood just on the cusp of reaching $38,000. Presently, BTC dipped about half-a-percent in the trailing 24 hours. Over the past seven days, it gained approximately 5%.
As has been the case across recent sessions, TipRanks’ blockchain analysis of Bitcoin presents a less-than-encouraging profile. Specifically, onchain signals point to an almost-decisively bearish framework. First, net network growth sits at only 0.32%, which represents the “true” growth of the underlying network. Second, the concentration of large holders’ position resulted in a reduction of 0.11%.
In my opinion, that’s a bit of a slap in the face regarding the spot Bitcoin ETF narrative. If institutional investors – or any investment class commanding large capital – are truly interested in the space, this concentration stat should move higher, not lower.
To be fair, at the current BTC price, 80% of stakeholders are in the money (ITM). So, we could be looking at a wait-and-see game.
The seemingly perennial number two among cryptos based on market capitalization, Ethereum (ETH-USD) presently trades hands at nearly $2,060. It’s riding a psychologically significant milestone, which may play into forward sentiment. Over the past 24 hours, it gained about 1%. In the trailing week, it swung north to the tune of almost 9%.
Interestingly, TipRanks’ blockchain analysis points to a largely neutral sentiment for ETH. However, some concerns exist. Specifically, net network growth only landed at 0.20%, which is historically low. Also, large transactions, which represents a momentum indicator based on the number of transactions greater than $100,000, only reached 3.62%. Again, that’s lower than the norm per TipRanks.
However, as with Bitcoin, a strong majority of ETH stakeholders (74%) are ITM at the current price. Also, the concentration statistic resulted in a positive accumulation, though extremely modest at only 0.07%. That might indicate greater willingness to speculate on Ethereum.
Nevertheless, we’re not talking about dramatically superior stats relative to Bitcoin. Thus, careful vigilance may be necessary.
Cryptos to Watch: Tether (USDT-USD)
To those who are new to cryptos to watch, mentioning Tether (USDT-USD) as one of the most important virtual currencies to monitor might seem odd. After all, with Tether being a stablecoin and thus pegged to a fiat currency (the dollar), a binary proposition exists. Either it’s pegged to the dollar or it’s not. However, the fluctuations away from a perfect 1:1 peg may provide important clues.
In lay terms, Tether represents the oil in the engine. I don’t care if you’re driving an exotic racecar or an old but faithful ride that runs on hopes and whiskey. Every engine requires lubricants and that’s exactly what USDT offers. So, it’s worth stopping and recognizing that per TipRanks’ blockchain analysis, the stablecoin presents “mostly bearish” signals.
While the key metrics of net network growth and large transactions both point to a pessimistic framework, I’m mostly interested in the concentration stat. Here, we saw a reduction of exposure of 0.16% by the crypto whales. If the biggest stakeholders of blockchain assets are mitigating exposure, I’m not sure I necessarily want to hold excessive volume.
During the height of the post-pandemic surge in cryptos, Chainlink (LINK-USD) is one of the top altcoins or alternative (non-Bitcoin) blockchain assets. Since then, it incurred an ebb and flow that saw other altcoins gain tremendous popularity. However, it’s currently making a comeback. With a market cap of approximately $8.22 billion, LINK ranks as the number 12 decentralized asset.
In the immediate term, Chainlink incurred some volatility. In the past 24 hours, it slipped almost 4%. However, in the trailing one-week period, LINK gained nearly 13%. Still, with the overall robust performance, some concerns exist. Per TipRanks, the summation of sentiment comes in as “mostly bearish.” In particular, net network growth only landed at 0.53%, lower than historical norms.
Also, large transactions accounted for only 7.04%, indicating possible fading interest among the whales. What’s also worth consideration is that at the current price of $14.74, only 56% of holders are ITM. In other words, should pressures build, investors might dump out to protect themselves.
Cryptos to Watch: Cardano (ADA-USD)
With cryptos, individual coins and tokens generally follow Bitcoin’s lead. On occasion, though, certain virtual currencies may find themselves breathing through air pockets. That might be the case for Cardano (ADA-USD). At first glance, ADA doesn’t seem that remarkable. In the trailing 24 hours, it lost 3% of value. In the trailing seven days, it swung up 3%.
However, according to TipRanks’ blockchain analysis, sentiment clocks in as “mostly bullish.” Most notably, the large transactions stat jumped to 4.65%, which is bullish for the Cardano network. It also implies that whales may look for undervalued digital assets rather than seeking out entirely new asset classes. So, the broader loyalty to the blockchain ecosystem may be justification for holding the most-promising assets long term.
Nevertheless, to paraphrase one of my favorite YouTube channels CinemaSins, no crypto is without sin. In Cardano’s case, only 33% of stakeholders are ITM while 61% are out the money (OTM). That’s a painful reminder that when it’s time to leave, it’s time to leave.
Another popular altcoin during the post-pandemic heyday attempting a comeback, Avalanche (AVAX-USD) printed one of the most impressive performances among major cryptos. In the trailing seven days, AVAX soared to the tune of over 32%. To be fair, a corrective lull hit the digital asset, sending it down about 7%. Still, that’s a print that will get you noticed.
However, is it enough to change the fundamentals of Avalanche. At the moment, according to TipRanks, the answer appears to be “not yet.” On the pessimistic side, net network growth landed at only 0.29%, which may indicate broader lack of enthusiasm. Further, what’s really striking is the concentration of large holders, which saw a reduction of 0.55%.
On the other hand, large transactions jumped to slightly over 11%, which is incredibly bullish. Moving forward, investors will want to be careful about the still-overheated profile of AVAX. Plus, with only 59% ITM, panic could set in among weakhanded investors.
Lastly, we’ll end this discussion on cryptos on a lighthearted note about Dogecoin (DOGE-USD). A divisive digital asset, some take DOGE seriously while others dismiss it as an ongoing modern day Tulip mania. On that angle, it’s difficult to debate the point considering that the meme coin started off as a joke. Nevertheless, like a penny stock, it’s possible to make money out of it.
Also, like a penny stock, arguably most traders run the risk of losing money. For that, I’m afraid TipRanks overall sentiment indicator of “mostly bearish” isn’t helpful. Specifically, the net network growth lands at only 0.23%, a historically low figure. Also, because of the low price, it should theoretically rank highly among retail investors.
Another concern centers on large transactions, which only account for 2.44%. At the moment, 57% of holders are ITM while 38% are OTM. Given that Dogecoin may be in the middle of printing a near-term head-and-shoulders pattern, tactical traders may want to wait until DOGE slips below 7 cents before considering exposure.
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.