If you can’t handle the extreme ebb and flow of high-risk asset classes, the cryptocurrency market probably isn’t right for you. We’re getting a taste of the wildness of the blockchain ecosystem, with the total market capitalization of all cryptos slipping conspicuously on Monday. At the moment, the value of global virtual currencies comes in at $2.26 trillion.
Of course, that’s disappointing for those who recently got into the space. Previously, the sector had done a good job of holding onto the $2.5 trillion market cap support line. Unfortunately, with the benchmark digital assets slipping badly in recent sessions, investors need to prepare for possibly extended rough waters.
What’s causing the choppiness in the high seas? Some experts point to the German government standing poised to liquidate a significant amount of cryptos “earned” through illicit means. Further, some evidence exists that the whales — or the big dogs in the market — have slowed their trading activity. With the fading momentum, people aren’t as eager to participate in cryptos.
Frankly, the erosion of major tech players like Nvidia (NASDAQ:NVDA) probably doesn’t help either in terms of ginning up sentiment. Still, that could also spell discounts for the opportunist. Below are several cryptos to watch this week.
Bitcoin (BTC)
It’s not time to hit the panic button. However, crypto investors need to pay close attention to Bitcoin (BTC-USD) this week. In the past 24 hours since the clock officially turned to Tuesday morning, the benchmark virtual currency lost more than 2% of market value. Over the past seven days, it sank more than 6%.
To be sure, it’s not so much the red ink in the basis points that hurt. Rather, it’s that Bitcoin is threatening to slip below — and perhaps well below — the critical $60,000 level. Yeah, you can say it’s just a number. But let’s keep in mind that not too long ago, BTC received praise for jumping back up above the 70K milestone. Going backwards is not what the bulls had in mind.
Is it time to buy the volatility, though? I think it might be the right idea but I wouldn’t be surprised if more downside materializes. So far, the candlestick of the June 25 session is very small compared to the red blotch represented by the Monday session.
Maybe take a nibble but keep the powder keg dry. That would be my idea.
Ethereum (ETH)
As with the benchmark digital asset, it’s not time to panic on Ethereum (ETH-USD). It is time to put your crosshairs on this bad boy because circumstances are getting volatile. In the past 24 hours, ETH slipped about a half percent. During the trailing one-week period, the number two crypto by market cap dipped around 2%. These stats aren’t what’s important.
Rather, as with other cryptos, the technical profile for Ethereum appears to be weak. Conspicuously, the popular virtual currency is trading hands at $3,374. That’s below its 50-day moving average, a key barometer for near-term market health. Also, it goes without saying that ETH is off its 20-day exponential moving average.
If more volatility materializes, which wouldn’t be out of the question, the $3,100 support line must hold. Otherwise, it could be a quick drop to $2,900. That’s the type of activity that the bulls will not want to see.
As for playing this market, I’m not liking how the response to the June 24 fallout has been so pensive. Again, nibble at Ethereum if you must but keep the powder keg dry.
Tether (USDT)
As the mainline stablecoin or cryptocurrency pegged to a fiat currency (typically the dollar), Tether (USDT-USD) provides a critical look into broader blockchain sentiment. Basically, USDT represents the oil that keeps the digital asset ecosystem’s chains moving smoothly. That’s because crypto investors will convert their wealth into Tether. When opportunities arise, they can respond immediately.
So, here’s how the theory plays out. If more market participants are comfortable storing their wealth in crypto terms, Tether should rise in value relative to dollars. In other words, USDT should be traded at a higher peg relative to USD. On the other hand, if people are not comfortable with cryptos overall, they’re less likely to hold Tether units. In this case, dollars will be worth more than USDTs.
Right now, one dollar is worth about 0.9996 Tethers. Under a perfect peg, one dollar should be worth one USDT unit. So, the fact that the stablecoin is worth less than a single greenback suggests broader pessimism. That’s not surprising given the evidence that we’ve seen.
Again, this isn’t meant to panic investors. However, it’s worth mentioning so that you don’t go too aggressive on cryptos this week. Like I said earlier, you may want to keep the powder keg dry.
Solana (SOL)
Let’s move to some potential opportunities in cryptos, beginning with Solana (SOL-USD). What’s interesting about SOL is that unlike many other major digital assets, SOL gained 8% of market value in the past 24 hours. That said, it didn’t move anywhere in the past week, losing about half-a-percent. So, what’s going on with this popular altcoin or alternative crypto?
Technically, Solana finds itself at an interesting crossroads. Generally, circumstances don’t look particularly pleasant. First, SOL failed to secure its top-level support line around the $178 mark. It then failed to hold the $156 line, represented by its 50-day moving average (DMA). At one point, Solana briefly slipped below its 200 DMA, which sits at $133.
Moving forward, the next few sessions will be critical in establishing the near-term trajectory. Presently, Solana trades hands at approximately $135.50. It really has to move higher from here, perhaps jumping to its 20-day exponential moving average (EMA), roughly $145.
If SOL is unable to make progress, it risks falling to the $100 level. As with the other cryptos, a small position now may be warranted. However, keep the powder keg dry for a bigger discount.
Cardano (ADA)
A fan favorite within the altcoin community, Cardano (ADA-USD) enjoys no shortage of supporters. However, it might be put-up-or-shut-up time for the blockchain asset, at least from an immediate perspective. In the past 24 hours, ADA gained about 2.5% of market value. That’s good. In the trailing week, it gained over 2%. That’s even better.
However, the problem is that Cardano’s technical profile is very suspect. Presently, the coin trades at just under 39 cents. That’s noticeably below the 20-day EMA, which comes in at 40.6 cents. Also, it’s significantly under its 50 DMA, which stands at 43.9 cents. The 200 DMA? Forget about it — that’s up at 54.2 cents. Honestly, the bulls need to think about small steps first.
A horizontal support line is evident around the 45.5-cent level. For Cardano to regain credibility immediately, it must move to this mark, full stop. I’m hoping that the legion of supporters will see the discount and bid ADA higher.
But it’s also possible that with the whales being pensive, ADA could struggle. For speculators, nibble at the currently cheapened price. Just know that there’s a possibility that Cardano could fall quickly below the 35-cent line.
Chainlink (LINK)
Those seeking a speculative upside wager in cryptos may want to turn their attention to Chainlink (LINK-USD). Let’s look at some interesting stats. During the past 24 hours, LINK gained nearly 7% of market value. Over the course of the last seven days, the cryptocurrency gained more than 2%. Amid the blockchain fallout, those are pretty encouraging numbers.
It just might get better. LINK has a tendency of see-sawing violently. Throughout much of April and May, the price of the digital asset baselined at approximately $13. However, during the recovery rally late last month, LINK briefly shot up beyond $19 on an intraday basis. That provided temporary hope that sentiment can carry Chainlink back to the $20 level.
Unfortunately, earlier this month, the crypto encountered a series of volatile sessions. The bad news is that the blockchain asset finds itself trading below its 50 and 200 DMAs. However, the good news is that the bears attempted to drive LINK below $13 but failed. Just to repeat, that price represented a prior support line.
Moving forward, it’s possible that LINK could start marching higher. I’ll start getting excited should the price breach its 50 DMA, which stands at $15.71.
Uniswap (UNI)
One of the most popular altcoins for its underlying utility, Uniswap (UNI-USD) dipped about 1% in the trailing 24 hours. During the past one-week period, the digital asset dropped almost 4%. At the moment, the crypto features a market cap of $5.67 billion. That’s good enough for number 18 in terms of the most valuable virtual currencies.
Looking at the technical profile, Uniswap finds itself in an interesting position. Presently, at a price per unit of $9.47, it sits below its 20-day EMA ($9.98). Further, it’s trading right at its 50 DMA. During the June 24 session, the bears managed to drive the price below this key barometer briefly before rebounding. To establish credibility, Uniswap needs to build from here.
One positive news item is that the price action has held strong above the 200 DMA ($8.79). If a correction materializes, a drop below this point could send the digital asset down to $7.
What may work in favor of Uniswap is strong support for the underlying ecosystem. If enough investors jump in, UNI could start moving higher. Still, I would probably keep the powder keg dry just in case for unexpected headwinds.
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.
