After an awful year in top cryptos to watch, it’s only natural that many investors look forward to 2023 for potential upside opportunities. Nevertheless, it’s vital that market participants don’t lose their focus. Primarily, the Federal Reserve likely represents the key arbiter of the blockchain ecosystem’s trajectory. As the juxtaposition between the benchmark digital asset and the M2 money stock demonstrates, the two metrics share a strong direct correlation.

Stated differently, as money supply rises (inflation), the circumstances places upward pressure on cryptos (and other commodities). And as money supply declines (deflation), the subsequent framework imposes downward pressure on virtual currencies. While blockchain advocates have waxed poetic about forming an independent ecosystem, for now, crypto market valuations depend on the Fed.

For this list of cryptos to watch, I’m going to focus on technical analysis, particularly key price targets to watch. This way, you can prepare for multiple scenarios as we head into a possibly eventful new year.

BTC-USD	Bitcoin	$16,640.40
ETH-USD	Ethereum	$1,207.95
USDT-USD	Tether	$1.00
BNB-USD	Binance Coin	$245.11
XRP-USD	XRP.	$0.34
DOGE-USD	Dogecoin	$0.07
ADA-USD	Cardano	$0.25

Bitcoin (BTC-USD)

The original virtual currency and still the benchmark of cryptos, Bitcoin (BTC-USD) enjoyed wild gains in 2021. However, at the time, the Fed continued to implement a dovish policy, thus spiking the money stock from already-elevated levels. Looking back in hindsight, it wasn’t that surprising that Bitcoin and other digital assets jumped.

The current hawkish profile presents major challenges for risk-on assets like these top cryptos to watch. For Bitcoin in particular, investors must watch out for the $17,000 level. Frankly, this level represents the bare minimum for BTC to surpass. To have any hope of a sustained upside recovery, BTC must convincingly take out the 20K barrier, which represented roughly the peak of the bull market cycle that peaked in late 2017/early 2018.

Ultimately, bulls should see a return of BTC at 40K. Then and only then can we engage in a realistic discussion about Bitcoin returning to prior heights and maybe setting new records. Failing to get to 20K, however, could mean sharp losses in confidence. And that could yield a trip to below 10K.

Ethereum (ETH-USD)

Another one of the top cryptos to watch, Ethereum (ETH-USD) garnered a strong reputation over the years. In addition, ETH also plays a significant role as a sector benchmark. As with Bitcoin above, Ethereum enjoyed a raucous year in 2021, eventually shooting up toward the 5K level. However, near mid-Nov.  2021, ETH began to struggle, badly. Then, in 2022, it lost about 68% of market value.

Moving forward, Ethereum must move convincingly past the $1,400 level. That was roughly the average weekly price of the asset during its peak run of January 2018. Of course, $1,400 represents a bare minimum target. From there, bulls will want to see Ethereum challenge and move past the $2,500 milestone. This point represents a prior support and resistance line from 2021 and 2022. Unfortunately, ETH has been meandering around the $1,200 price point, where it stands at time of writing (Dec. 31). If it can’t reach the minimum threshold of $1,400, I suspect the downside risk would be around the $700 range.

Tether (USDT-USD)

Technically speaking, Tether (USDT-USD) features an exponentially less-interesting profile than other cryptos to watch. Obviously, as a stablecoin or digital asset pegged to a fiat currency (usually the dollar), USDT should stay at $1. With a few notable exceptions, this has been largely the case. Therefore, you might ask, what exactly is there to talk about?

I’ve been thinking a lot about stablecoins and the harsh reality is this: holding an excessive amount of your wealth in USDT exposes you to double risk. For instance, very few young investors sit on cash during normal market cycles. With the purchasing power of the greenback eroding 2% to 3% in the modern era, cash holders end up losing.

When you hold Tether, you also end up losing (during inflationary cycles) because of its 1:1 ratio with the greenback. However, merely holding onto USDT by itself presents the possibility of a digital bank run and complete implosion. Thus, think very carefully about heavy exposure to such cryptos to watch.

BNB (BNB-USD)

Speaking of implosions, BNB (BNB-USD) – essentially the digital asset underlining the Binance exchange – experienced a significant boost of interest, especially because it wasn’t FTX. As you’ve probably heard by now, the issue imposed a huge credibility threat to the blockchain. In addition, investigators uncovered details that make this matter very ugly.

Unfortunately, the enthusiasm appears to have been short lived. At the moment, BNB trades hands for $245.11. In 2022, the previously labeled Binance Coin suffered a year-to-date loss of around 53%. In the trailing month heading into the new year, it’s down about 18%. Moving forward, BNB bulls must target the $450 level. From there, it could mount a realistic challenge of the $600 threshold.

However, we can’t talk about $600 until BNB at least breaks into $300 territory. But that’s the problem. With many investors losing interest in the top cryptos, BNB faces a credibility threat. I would be extremely cautious.

XRP (XRP-USD)

Invariably, any discussion about XRP (XRP-USD) focuses on its founding enterprise Ripple Labs and the lawsuit which the Securities and Exchange Commission leveled against it. To recap, the SEC views XRP as a security and therefore putting Ripple under the purview of the regulatory agency. Naturally, Ripple disagrees, arguing that XRP represents one of many cryptos.

Ultimately, the prize that Ripple seeks is legal clarity and precedence. If the enterprise emerges victorious, then it will achieve for its coin what no other digital asset enjoys. Hopefully, that would mean a significant move higher because frankly, XRP needs it. Presently, the coin trades hands at around 34 cents a pop. But $1 has long symbolized a critical support and resistance line.

Nearer-term, you’d like to see XRP reach convincingly between 53 cents and 63 cents. That’s where XRP previously fell to and where the bulls provided strong support. Failing that – and perhaps a legal disappointment – XRP risks dropping to around 14 cents.

Dogecoin (DOGE-USD)

Not shockingly, Dogecoin (DOGE-USD) generated significant criticism throughout its existence. Starting off as a joke, several social influencers and renegade celebrities – obviously Elon Musk comes to mind – latched onto Dogecoin. For conservative investors, this fanfare might be too distracting. Plus, DOGE epitomizes the wild nature of cryptos. However, the “sincere” profile of the underlying community brings some charm to the table.

With Dogecoin, you’re not going to find too many folks talk about changing the world through its underlying blockchain architecture. Instead, the focus is on community and fun. Sadly, though, there hasn’t been much fun to be had with DOGE in 2022. But will 2023 be any different?

For the optimistic narrative to ring true, Dogecoin must get to the baseline of the mountain so to speak. And this threshold stand at around 30 cents. You get to 30-cent DOGE and grassroots enthusiasm can quickly return it back to prior peaks. Failing that, it would not be surprising to see Dogecoin fall below a penny.

Cardano (ADA-USD)

One of the more popular cryptos available, Cardano (ADA-USD) is the little engine that could. Of course, the underlying blockchain architecture represents more than mere resilience. Effectively, Cardano pioneered the protocol known as proof of stake, which is a more energy-efficient consensus mechanism. Indeed, Ethereum switched over from its prior proof of work to a staking protocol in a much-publicized transition.

Tragically, the underlying powerful fundamentals for Cardano did not spare its ADA coin from volatility. In 2022, ADA hemorrhaged approximately 82% of market value. It’s one of the worst performances among major cryptos. The bears have been especially harsh on ADA, leading to an ugly spiral.

For bulls to have any chance, it first must stop the bleeding. From there, it must reestablish control at $1. That was roughly the peak of the late 2017/early 2018 bull run culmination. As well, it represented support and resistance in 2021 and 2022. However, given the negative momentum, my concern is that ADA will fall to around 10 cents.

On the date of publication, Josh Enomoto held a LONG position in BTC, ETH, USDT, XRP, DOGE and ADA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.