With the “Uptober” phenomenon once again confirming its seemingly supernatural powers, cryptos dominate speculative discussions. After the sector’s market capitalization floundered a bit above the $1 trillion level, the overall value now stands at $1.27 trillion. Still, what should be good news doesn’t seem to resonate with smart money.
On paper, the dichotomy appears odd. For example, business headlines covering cryptos focus on spot-asset-based exchange traded funds (ETFs). Many prominent voices have chimed in, stating that they believe the U.S. Securities and Exchange Commission (SEC) expect such approval sometime this year. Entering November, that’s quite a bold projection.
Nevertheless, it’s important to remember the other adage: buy the rumor, sell the news. We’ve already seen what hype about an event can do to the cannabis market, which boomed early on but then faded into almost-desperation mode afterward. Such a rags-to-riches-back-to-rags tale has also impacted the cryptocurrency market.
My take? I’m not here to cast aspersions on blockchain assets. At InvestorPlace, I’ve been one of the early voices supporting the bullish case for virtual currencies. But I know how wild this market can be and I want you to be aware of the risks.
Cryptos: Bitcoin (BTC-USD)
In the wee hours of the Tuesday morning session, Bitcoin (BTC-USD) trades hands at a price of $34,247. Subsequently, this level represents a mild loss of about 0.3% over the past 24 hours. In the trailing seven days, BTC gave up roughly half a percent. Thus, in the near term, it doesn’t appear to be going anywhere but it’s also not losing anything.
However, such a standstill carries myriad interpretations, which also makes BTC and other cryptos risky. To better assess the situation, I’m indebted to TipRanks’ excellent crypto analysis indicators. Based on a collection of data from on-blockchain and exchange-related signals – as well as futures market momentum indicators – the overall sentiment comes in as “mostly bearish.”
Specifically, net network growth comes in at only 0.3%, which is very low for Bitcoin. This metric represents the change in the total number of addresses for the target crypto. Also, large transactions comes in at only 1.16%, which again is low for Bitcoin.
Basically, the latter metric suggests that institutional (and high net-worth) investors are presently hesitant on BTC. I’d consider that a warning sign about Bitcoin and other cryptos.
Ethereum (ETH-USD)
Heading into the early hours of Tuesday morning, Ethereum (ETH-USD) saw only modestly positive moves. In the past 24 hours, ETH gained just under 1%, leading to a price tag of $1,800. However, in the trailing one-week period, the number two virtual currency by market cap slipped a little more than 1%.
Looking at TipRanks’ crypto analysis screener, Ethereum also pings as a negatively tilted blockchain asset. Here, the signals from decentralized asset exchanges along with futures market momentum points to a neutral status. However, on-chain signals are decidedly pessimistic, yielding a “mostly bearish” sentiment.
Specifically, net network growth lands at a lowly 0.21%, which is subterranean for Ethereum. Also, large transactions come in at only 1.77%, which – as with Bitcoin– suggests that institutional investors moved to the sidelines. If so, that doesn’t really bode well for ETH and other cryptos.
What’s also problematic here is that 33% of ETH holders remain out of the money (OTM) at the current price. That means one-third of investors still need to get Ethereum higher, possibly presenting a panicky environment.
Cryptos: Tether (USDT-USD)
As a stablecoin pegged to the dollar, Tether (USDT-USD) might not initially seem important to day-to-day fluctuations in cryptos. However, nothing could be further from the truth. Sure, you’d rather have a Lambo in your garage as opposed to jugs of motor oil. But guess what? That Lambo isn’t going very far without oil. And the same can be said about Tether, which represents the lifeblood of the “capital” blockchain ecosystem.
Here, TipRanks’ crypto analytics provide an invaluable insight. At time of writing, the underlying indicators suggest that the sentiment for Tether is “mostly bearish.” Specifically, on-chain signals point to a rather concerning framework. With the concentration level of Tether dropping to 0.41% below breakeven, that’s a pessimistic signal.
Per the investment resource, concentration points to either the accumulation (bullish) or reduction (bearish) of large holders’ positions. In other words, the whales are exiting out of Tether. To be fair, the analytics don’t tell us how the institutional players are moving out of USDT. Still, if they’re moving away from Tether to fiat – oh, the horror! – currencies, that’s a rough sign for cryptos.
BNB (BNB-USD)
On early Tuesday, BNB (BNB-USD) found itself trading hands at around $227. Over the trailing 24 hours, BNB gained slightly, moving up 0.33%. On the flipside, during the past one-week period, the cryptocurrency gave up nearly 2% of market value. Since the beginning of this year, BNB slipped 7%.
Unfortunately, on-chain data is not readily available for BNB. However, from a technical view, BNB represents one of the major cryptos conspicuously struggling for traction. While the coin is above its 50-day moving average, it’s only modestly so, with the running average sitting at $214.54. What’s worse, the long-term 200 DMA stands at nearly $252. Therefore, the bulls have much work to do.
Moving forward, the first natural target is the $243 horizontal support line that was active between June through mid-August of this year. However, that’s only a modest upside target. To begin the journey of reestablishing credibility, BNB must break into $300 territory.
Unfortunately, that could be quite a challenge. After all, if institutional investors aren’t interested in the major cryptos, BNB doesn’t seem that enticing.
Cryptos: XRP (XRP-USD)
Interestingly, XRP (XRP-USD) simultaneously serves as both a warning and as a blueprint for sustained optimism in cryptos. First, let’s discuss the basics. On early Tuesday morning, XRP gained almost 4% of market value in the past 24 hours. Also, in the trailing one-week period, it swung up 5%. So, what’s all this pessimistic talk?
Well, ever since XRP creator Ripple Labs found itself on the wrong end of the SEC’s scrutinization process, ardent blockchain supporters believed in an underlying opportunity. If Ripple scored a legal victory, XRP would enjoy official clarity regarding its right to exist. Subsequently, when Ripple scored said victory, XRP skyrocketed. However, the SEC is fighting back, which has significantly dampened sentiment.
Nevertheless, in recent sessions, XRP has been clawing back what it lost. In the trailing one-month period, the crypto gained 11%. Also, the digital asset now trades above its 50 and 200 DMAs. Moving forward, the $1 target symbolizes a strong psychological target.
Out of the major cryptos, maybe XRP has the chance to inch higher under the radar. Still, you want to be cautious.
Cardano (ADA-USD)
At the moment, Cardano (ADA-USD) symbolizes one of the most enticing but also perplexing cryptos. First, the basic details. On early Tuesday morning, ADA trades hands at a little over 30 cents. This figure represents a 2.4% lift in market value over the past 24 hours. In the trailing seven days, Cardano gained 6%.
Looking at the technical chart, the alternative crypto or altcoin blew past its 50 DMA, which sits at 25.8 cents. Interestingly, though, Cardano’s incredible rally encountered a conspicuous headwind at its current juncture, right where the 200 DMA stands. What’s more curious, the 30-cent level is a longstanding demarcation line separating optimism and pessimism.
Turning to TipRanks’ crypto analytics, on-chain, exchange and derivatives market indicators point to a neutral sentiment. However, what’s interesting is that the concentration indicator sits at 1.97% below breakeven. Again, this metric tells us that large ADA holders have been reducing their exposure.
What’s more, I’m not sure how long this rally can last. Only 18% are in the money (ITM) at the time of writing price. Thus, it’s possible that OTM investors might just call it a day and salvage more of a lesser something than hope for a profitable future that might not materialize.
Dogecoin (DOGE-USD)
Despite being a joke cryptocurrency, Dogecoin (DOGE-USD) bulls are fighting, both for sustained higher valuations and for broader credibility. No matter what you think of the digital asset, the pugnaciousness is admirable. On Tuesday morning, DOGE inked a price of 6.93 cents. In the trailing 24 hours, it gained less than 1%. During the past week, the coin swung up over 2%.
Turning to its technical chart, DOGE swung past its 50 DMA, which sits at 6.2 cents. And it also inched a bit higher from its 200 DMA. However, this level also represents a resistance barrier. With the 7-cent line represent another long-term demarcation level separating bullish and bearish sentiment, it’s vital for the bulls to rise above.
Whether it does depends on sustained demand. Unfortunately, TipRanks’ crypto analytics indicates that sentiment sits as “mostly bearish.” Notably, net network growth only comes in at 0.12%, which implies lackluster participation among retail traders. Also, large transactions have dropped to 7.99%, which is another bearish signal.
In fairness, DOGE bulls are trying to march higher. I’m just not sure if there’s enough support based on the available data.
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.
