Since roughly the middle of October, seemingly all eyes became fixated on cryptos to watch. From a total market capitalization of $1.06 trillion to its time-of-writing haul of $1.41 trillion, virtual currencies went on a ride. However, like any theme park attraction, investors are wondering when the drop might occur or if blockchain-derived assets can continue marching higher?
To be sure, no easy answers exist. On the optimistic front, cryptos to watch may have become the new gold standard. While generations age out and other cohorts move in, the desire for both speculation and wealth preservation remain universal. What has changed is the medium. According to a CNBC report, millennials and Gen Z unsurprisingly represent the lion’s share of mobile banking app use.
Subsequently, it was inevitable that decentralized digital assets would enjoy enormous support among young investors. Still, not everything appears bright for cryptos to watch. Primarily, global economic concerns point to a possible slowdown in the economy. Now, whether that’s a full-blown recession or not remains to be seen. Still, apparently most economists believe a deceleration is in order.
With that, investors need to think carefully about their exposure to the below cryptos to watch.
After seemingly on course to eventually hit the $40,000 level, Bitcoin (BTC-USD) incurred a noticeable momentum loss. No, it’s not a panic-inducing move. Over the trailing 24 hours, BTC slipped about 0.3%. And in the past one-week period, it’s down roughly a percent below parity. Still, the deceleration symbolizes a sharp shift in sentiment.
Previously, the headlines screamed about a spot-BTC exchange-traded fund. Theoretically, if the U.S. Securities and Exchange Commission (SEC) approves such a fund, it could unlock a wave of capital investment into cryptos to watch. And many are holding onto this narrative, which seems reasonable. Still, it’s also important to realize that the trajectory could go negative too.
First, investors must be aware of the adage, buy the rumor, sell the news. In other words, when something appears too obvious, a possibility exists for severe disappointment. Second, it’s not entirely clear if institutional investors will pile into virtual currencies. If we incur an economic slowdown, sentiment will likely pivot to risk-off assets.
As the number two cryptocurrency by market cap, Ethereum (ETH-USD) commands significant influence. That can be great during upcycles, leading to downwind benefits to other altcoins or alternative cryptos to watch. However, with ETH struggling to maintain its grip on the psychologically significant $2,000 level, anxiety is rising. Not helping matters is that it lost more than 1% of market value in the past 24 hours.
Over the trailing seven days, ETH gained but barely, just a bit above half-a-percent. While Bitcoin advocates look to the possibly imminent SEC decision, Etheruem has its own set of challenges. Per Cointelegraph, the possibility of the U.S. Department of Justice (DOJ) handing down severe repercussions against Binance founder Changpeng “CZ” Zhao may be contributing to ETH’s volatility.
But what does Binance have to do with Ethereum? Due to the underlying network supporting various decentralized finance (DeFi) applications, a recent security breach calls into question the entire DeFi industry. And that could lead to greater calls for regulation, which may negatively impact Binance and major cryptos like ETH.
As the most valuable stablecoin – or digital asset pegged to a hard currency – Tether (USDT-USD) may lack the traditional capital gains motivation of other cryptos. Nevertheless, the stablecoin effectively provides liquidity for the underlying blockchain ecosystem. Without USDT and similar digital assets, investors would have to hold their wealth in either fiat currencies or in volatile crypto coins.
Put another way, Tether provides a quick and convenient intermediary service. As a result, it’s useful to monitor demand flows. According to TipRanks blockchain analytics, USDT runs a neutral profile. Interestingly, though, net network growth of Tether sits at 0.48%, which is historically low. Also, the number of transactions greater than $100,000 dipped 0.7%, a technically bearish indicator.
That said, Tether the company made news recently when it assisted the DOJ and the U.S. Secret Service to help combat illicit activities and provide support to victims. In my view, it’s a noteworthy PR move since the organization does draw questions of its own.
Following a promising rally that started last month, XRP (XRP-USD) – the popular and simultaneously controversial cryptocurrency made by Ripple Labs – has turned in a month to forget in November. In the past 24 hours, XRP lost more than 1% of market value. And over the trailing one-week period, the crypto coin appears on the verge of declining by 2%.
Since hitting a “closing” peak of 71.5 cents on Nov. 6, XRP lost a considerable amount of momentum. That said, the one positive here is that its 50-day moving average (which currently stands at 58.5 cents) has offered support; first on Nov. 21 and on Monday, where the digital asset is trading modestly above 60 cents. Therefore, it’s not out of the question that XRP can march higher from here given the technical support.
Also, it’s worth pointing out that since the beginning of this year, the baseline of XRP has printed a series of higher lows. Still, the coin isn’t devoid of risks. In particular, volume has fallen off substantially in the second half of November. And peak volume this year occurred in July, suggesting that XRP still has work to do.
One of the recent performance benchmarks of non-BTC cryptos, Solana (SOL-USD) started skyrocketing in the middle of Uptober. However, after briefly challenging the $70 level, SOL conspicuously incurred decelerated momentum. Now, the question remains: is this merely a brief consolidation phase until SOL bounces higher or will it correct sharply?
Frankly, arguments can be made for both sides. On the positive front, it’s possible that Solana may be printing a bullish pennant formation. Basically, the “flagpole” of this pattern materialized between Oct. 15 and roughly mid-November. Under conventional interpretation, the price action narrows into an apex point. From there, we may see a breakout move.
On the other hand, “technical” analysis leaves itself open to myriad interpretations. Unfortunately, the discipline lacks an epistemological standard. Setting that problem aside, volume peaked on Nov. 1, meaning that it failed to confirm the rally’s second half. Generally, you want to see rising volume confirm a rising price action.
Combined with broader economic concerns, I would take a cautious approach to SOL.
Another top performer among cryptos that incurred a recent reality check, Cardano (ADA-USD) seems unusually risky at this juncture. It’s not just about its recent performance, though that does raise eyebrows. In the past 24 hours, ADA slipped more than 3%. During the trailing week, the crypto coin printed an almost identical loss.
Interestingly, TipRanks blockchain analytics shows that the overall sentiment for Cardano rings as “mostly bearish.” Specifically, due to the recent negative price action, the number of investors that are in the money (ITM) at the current price dipped by 1.54%, a bearish signal. In terms of total allocation, only 35% of stakeholders are ITM, which may imply weariness regarding further investment.
Second, the concentration of large stakeholders’ position dipped by more than half-a-percent, another pessimistic signal. Looking at the charts, ADA prints a “distorted” pennant. While it’s possible that Cardano could jump higher from here, accumulation volume has been fading since Nov. 9. Therefore, a healthy dose of skepticism may be in order.
One of the cryptos that has been on the move, Toncoin (TON-USD) gained almost 3% of market value in the past 24 hours. Among the cryptos in the top 20 by market cap, TON is the only asset – aside from stablecoins – to achieve this status. And over the trailing one-week period, TON swung up 4%. It’s not the only asset with a positive figure here but it’s darn close.
Presently, Toncoin commands a market cap of about $8.35 billion. To put this figure into perspective, the crypto needs to gain just over 7.3% of value to represent the caboose of the top 10 most valuable virtual currencies. That’s quite an achievement for a decentralized asset that didn’t begin trading publicly until August of 2021.
Of course, investors should not expect an easy ride here. Throughout its short existence, Toncoin has been all over the map, dropping to a low last year of around 82 cents to hitting an all-time high of approximately $4.50.
Nevertheless, TipRanks views TON as a “mostly bullish” play. If you have some loose change lying around, it could be interesting.
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.