With the U.S. Securities and Exchange Commission (SEC) facing a Jan. 10 deadline for one of the applications associated with a spot-virtual currency exchange-traded fund, anticipation soared for several individual cryptos to watch. After all, what’s good for the benchmark decentralized digital asset usually is good for other blockchain-derived coins and tokens.
Still, some questions remain. As I and other sources have pointed out, a risk exists about the hype train running out of steam. You’ve likely heard the phrase, buy the rumor, sell the news. That certainly applied to the legal cannabis market. Some legitimate concerns exist that once ETFs are approved for the blockchain space, cryptos to watch could stumble hard before eventually rising higher.
That’s a non-zero-probability event. At the same time, I’m rethinking this belief I once held. The thing is, investors of cryptos skew young and they’re probably skewing younger every year. Surely, the suits of Wall Street understand this. They know that their time may be up and it’s only sensible to have exposure to blockchain assets.
So, while virtual currencies may fall after Wednesday, they could also storm higher. Be prepared for anything as we dive into the below seven cryptos to watch for the week.
Bitcoin (BTC-USD)
With anticipation running hot for a Bitcoin (BTC-USD) ETF to be approved soon, it was only natural that BTC stormed higher. In the past 24 hours from Tuesday early morning, BTC gained nearly 7% of market value. Over the past seven days, it swung up more than 3%, one of the few cryptos to watch that posted positive returns during this period.
Turning to TipRanks’ blockchain analytics site, the overall assessment for the cryptocurrency is “mostly bullish.” However, it’s a nuanced assessment. Notably, the ratio of holders making money in BTC at the current price stands at 91%. Moreover, 9% are at the money, meaning that no one is losing their shirt at the moment. That’s significant because enthusiasm is sky-high.
At the same time, the large transaction metric – defined as the number of transactions greater than $100,000 – sat at 0.41%, which is bearish considering historical norms. Looking at Bitcoin’s point-and-figure (P&F) chart, strong support lies at the $43,000 level. As a warning, anything below $40,500 is problematic.
Ethereum (ETH-USD)
As the number two cryptocurrency by market capitalization, Ethereum (ETH-USD) tends to go wherever Bitcoin does. That was the case in the past 24 hours, which saw ETH gain about 4% of market value. Where a discrepancy occurred was in the seven-day performance. While Bitcoin swung higher, Ethereum incurred a loss of around 3%.
Interestingly, looking at ETH’s on-chain analysis, the overall assessment for the coin is “mostly bearish.” As with the benchmark crypto, Ethereum’s large transactions metric was eye-opening and not in a good way at 1.02% below parity. That’s well below historical norms. Also, net network growth – representing true growth in the underlying blockchain – was only 0.25%. Again, that was a bearish signal.
Further, only 73% of ETH holders are in the money, meaning a greater magnitude of skepticism exists. Looking ahead, the natural target for the bulls is $3,000. However, if circumstances get volatile, an assessment of ETH’s P&F chart suggests solid support between $2,200 and $2,260. Failing that, there could be a challenge of the $2,050 level.
Tether (USDT-USD)
As has been the case in recent sessions, Tether (USDT-USD) has held strongly to its one-to-one peg with the dollar over the past 24 hours. What’s also interesting is that, up until the early Tuesday morning session, USDT held above the 1:1 ratio line with the greenback over the past seven days. At the moment, Tether is holding the line exactly at one buck per unit of USDT.
Fundamentally, with Tether “beating” the dollar peg over the past week (Tuesday morning aside) presents an enticing interpretation. As you know if you’re a longtime investor of cryptos, USDT is a stablecoin. Its function is effectively to provide liquidity for the crypto market while simultaneously enabling investors to “freeze” their wealth in crypto terms. That’s convenient for those who trade virtual currencies daily.
Now, beating the peg implies that there’s greater demand for USDT than there are for dollars; that’s generally a positive sign for cryptos. So long as the immediate decline in the value of Tether doesn’t materially dip below 1:1, investors might be able to chalk this latest action as typical market noise.
Solana (SOL-USD)
After going on a meteoric run, Solana (SOL-USD) in the trailing one-week period incurred a loss of more than 11%. Is this the beginning of the end of the current bull run in SOL? Certainly, anything is possible in cryptos to watch. However, the correction could just be a healthy breather following a stratospheric performance. I wouldn’t necessarily be eyeballing the panic button until SOL falls below key support lines.
First, SOL gained more than 12% of market value in the past 24 hours. Yeah, it may be riding on Bitcoin’s coattails but the broader bullish factors remain intact. For example, trading at a bit under $102, that’s still a conspicuous gap from its 50-day moving average of $80.63. Also, the 200 DMA sits well below at just under $40.
Looking at Solana’s P&F chart provided by Stockcharts.com, we see tremendous enthusiasm from $87 to $104. Combined with technical considerations, I’d guess that strong support exists at $90. Failing that, $70 will represent the next support line. If you’re going to put a stop-loss, that might be where you’d put it.
XRP (XRP-USD)
One of the more consistent performers among cryptos to watch, XRP (XRP-USD) faces a serious test. This reputation of consistency has been put to the challenge, presenting a nerve-wracking situation for stakeholders. Yes, XRP gained roughly 3% in the trailing 24 hours. However, in the past week, the much-discussed digital asset slipped more than 10%.
Now, cryptos tend to rise and fall quite dramatically so by themselves, these stats mean little. However, since October of last year, XRP has been trading above its 200 DMA. Further, between around mid-November to early January, XRP rose steadily and modestly from roughly 61 cents to 62 cents. It’s not so much the return that’s important but rather that XRP kept marching forward.
However, as previously stated, XRP suffered a collapse over the past seven days. Now, XRP trades just below its 200 DMA, which has been unfamiliar territory recently. To be sure, XRP has bounced back from such a circumstance, both in September and October this year. Still, it’s worth keeping an eye on this virtual currency.
Cardano (ADA-USD)
If XRP is facing a tough test, then Cardano (ADA-USD) is facing an acute danger of extreme volatility. As you likely know, ADA skyrocketed since the Uptober season, dramatically changing its narrative from a chronically underperforming blockchain asset to one that has seemingly caught everyone’s attention. Unfortunately, it may be due for a sharp near-term correction.
On the technical front, while ADA gained nearly 7% of market value in the past 24 hours, it lost more than 17% in the trailing week. That’s a staggering loss, even when stacked against other underperforming cryptos. Also, ADA is trading hands right at its 50 DMA (around 52 cents). If it drops below this key threshold, there might not be much support until around 38 cents.
Making matters worse, TipRanks shows that the on-chain analytics assessment for Cardano is “mostly bearish.” In particular, the concentration of large holders’ position shows a 0.62% reduction in exposure. You don’t want to see that as an asset struggles at a pivot threshold.
Plus, only 46% of stakeholders are in the money, meaning they could be moving onto more compelling cryptos.
Avalanche (AVAX-USD)
An odd crypto based on its present technical posture, Avalanche (AVAX-USD) also faces a potential correction. Throughout December, AVAX ran its sentiment indicator well into overheated territory. Unfortunately, toward the tail end of 2023 and into the beginning of this year, this factor caught up with investors. In the past seven days, AVAX lost almost 15% of market value.
To be fair, AVAX bulls are putting up a big fight. In the past 24 hours, the crypto gained nearly 12%. But is that enough? If I’m reading the tealeaves correctly, maybe not. You see, from November of last year until late December, it almost seems as if AVAX is printing two-thirds of a bearish head-and-shoulders pattern. If so, we might see a sharp decline to around the $22.50 level.
In fairness, that’s just pure speculation. However, I’m not a big fan of assets struggling near key moving averages. That said, TipRanks does show that the overall assessment for Avalanche is “mostly bullish.” In particular, large holders have added to their positions.
Still, given the implied volatility of the ragged chart pattern, I would probably wait for additional confirming signals.
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.
