Last week, the sharp rise in the benchmark blockchain asset invigorated other cryptos to watch, seemingly presenting a favorable backdrop. However, sentiment following the May 20 session became choppy, leading to multiple interpretations.
On one hand, it’s possible that the Federal Reserve could forward a dovish or at least somewhat accommodative policy. While it’s not good to overheat a roaring economy, interest rates presumably can’t stay elevated indefinitely. We’re already seeing the consequences of this directive, with major tech firms continuing to lay off their workers.
On the other hand, jobless claims recently declined, which suggests that the labor market is performing well. That’s a positive development but it also means that more dollars are chasing after fewer goods. That’s inflationary and not the direction the Fed wants to go, raising the prospect of a hawkish adjustment.
With this ambiguity, it’s been difficult to navigate the blockchain ecosystem. Below are seven key cryptos to watch.
Bitcoin (BTC-USD)
Launched on July 13, 2010, Bitcoin (BTC-USD) remains the benchmark by which all other cryptos to watch are judged. Over the past 24 hours since late Monday night, BTC found itself down almost 1%. Over the past one-week period, it slipped roughly 3.5%. At the time of writing, it’s trading hands at $68,591, translating to a market capitalization of $1.35 trillion.
Technically, what the bulls may be hoping for is a rounding bottom formation. Note that on March 13, Bitcoin “closed” at a price of approximately $73,118. On May 1, it fell to a closing low of 58,277. Recently, the bulls have attempted to push the price beyond the crucial $70,000 level, with some success. However, the bears have been attempting to suppress upside momentum.
What could work in Bitcoin’s favor is the possibility of permanent inflation. Further, policymakers will want to avoid too much stress in the labor market. If so, a general accommodative framework may be the order of the day.
On the risk side, I’m still not a big fan of fading acquisition volume since late February. If you are going to accumulate BTC, I would do so cautiously.
Ethereum (ETH-USD)
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The seemingly perennial number two in terms of market cap, Ethereum (ETH-USD) represents another benchmark for cryptos to watch. Over the past 24 hours, ETH dipped a little bit more than 1%. However, in the past seven days, it returned slightly over 4%. Presently, the coin trades hands at $3,835, translating to a market cap of $460.7 billion.
Technically, a rounding bottom formation could also be in play for Ethereum. However, it must be stated that the pattern is much wilder than for Bitcoin. On March 11, ETH closed around $4,066. By May 14, the number two virtual currency found itself down at $2,881. A few sessions later and the blockchain asset was up near $3,662. As stated earlier, it’s now above the $3,800 level.
Two factors are important here. First, ETH is also trading above its key technical gauges, the 50-day and 200-day moving averages. The former metric stands at $3,228 while the latter is down at $2,825. Second, Ethereum has seen robust acquisition volume recently. That lends support to the idea that this rally is sustainable.
It’s still something to watch carefully as cryptos are incredibly volatile. Still, the latest development is encouraging.
Tether (USDT-USD)
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Launched on Feb. 25, 2015, Tether (USDT-USD) represents a stablecoin that operates on the Ethereum platform. Per data from Yahoo Finance, USDT is actively traded on 86,498 markets. Total trading volume amounts to a value of over $52 billion. Fundamentally, Tether effectively provides the “grease” in the flywheel of the blockchain ecosystem.
Of course, USDT being a stablecoin is pegged to a fiat currency, in this case, the U.S. dollar. That’s relatively boring in terms of trading opportunities. However, what makes Tether worthwhile to investigate is that its relative value to the greenback can provide clues about sentiment. If people are excited about cryptos to watch, it stands to reason that USDT should be worth above its dollar peg.
However, what we are seeing right now in Tether is that it’s trading below the peg. Right now, one dollar will get you only 0.9993 USDT units. That means the greenback is worth more than its equivalent unit of Tether tokens.
If we were in a robust bull market, you would likely see the opposite: Tether being worth more than its dollar equivalent. That doesn’t mean cryptos are doomed to fail. Still, it does serve as a warning against overexuberance.
Solana (SOL-USD)
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For those who are supremely bullish on cryptos, Solana (SOL-USD) presents a potentially lucrative opportunity. In the past 24 hours, SOL finds itself up around 1.3%. However, in the trailing seven days, the crypto lost more than 9% of market value. That’s a sizable drop compared to other major virtual currencies, begging for the contrarian trade.
Looking at the technical chart, it’s possible that Solana could also be forming a rounding bottom formation. On March 17, Solana closed at $201.69. By the end of April, it found itself down at a closing low of $121.13. On May 20, it shot up to an intra-day high of $188.29 before dipping to its present price of $167.52.
It’s a similar pattern to the other cryptos on this list. Moreover, Solana finds itself above the key gauges of the 50 DMA ($153) and 200 DMA (approximately $120). It’s also trading above its near-term 20-day exponential moving average.
In terms of risk, we must mention the volume: acquisition volume has faded since March, which I don’t like. Still, an inflationary framework could help boost sentiment.
XRP (XRP-USD)
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While many cryptos have posted enticing performance metric, that doesn’t apply to the entire sector. Case in point is XRP (XRP-USD). Over the past 24 hours, XRP lost about half a percent. That doesn’t sound bad at all. However, in the trailing one-week period, the digital asset slipped over 1%. Frankly, the lack of forward progress is frustrating when it needs to demonstrate upward mobility.
The problem really started on April 12. At the beginning of the session, XRP traded hands at nearly 61 cents. At the conclusion (as in 24 hours later), the coin was down at 54.7 cents. On April 13, XRP finished the day at 48 cents. Presently, the coin features a per-unit price of 53 cents, unable to break resistance around 54 cents.
Conspicuously, XRP is trading right where its 50 DMA sits. That means the next few sessions will be critical. To note, XRP is already well below its 200 DMA, which stands at 58 cents. Therefore, it needs to start moving quickly. With acquisition volume fading to boot, prospective investors should be careful.
Cardano (ADA-USD)
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One of the most popular altcoins or alternative cryptos, Cardano (ADA-USD) represents another frustration-inducing blockchain asset. In the past 24 hours, ADA dipped slightly below parity. However, in the trailing week, the coin finds itself down nearly 8%. It probably needs to find bullish momentum soon to avoid severe technical damage.
One of the main challenges for ADA is that it can’t seem to generate traction. As a result, it sits below its 50 DMA of 47.2 cents. Priced at 45.9 cents at time of writing, ADA is also well below the 200 DMA, which comes in at 53.7 cents. As with XRP, the troubles started on April 12, when Cardano incurred a sizable drop in value. The next day’s session only added to the misery.
Since then, ADA has been trying to break out of its rut. However, there appears to be a near-term technical barrier at the 48-cent level. That’s unfortunate because Cardano really needs to be at 60 cents to establish credibility.
As with many other cryptos, acquisition volume has faded since late February/early March. It’s best to exercise caution here.
Chainlink (LINK-USD)
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One of the toughest cryptos to call, Chainlink (LINK-USD) also happens to be one of the more compelling ideas. In the past 24 hours, LINK gained over 7% of market value. Over the trailing seven days, it’s up more than 8%. Currently, the decentralized digital asset trades at $18.46, translating to a market cap of $10.84 billion.
Looking at its technical chart, as with other altcoins, Chainlink suffered badly during the two sessions from April 12 and April 13. For a few weeks, LINK spent a considerable amount of time below the $15 price point. However, the May 16 session saw significant upside momentum, leading to a closing price of $15.52. Since then, Chainlink has steadily marched higher.
The good news is that at the present level, LINK is above the $17.50 horizontal support line. However, it needs to start moving convincingly upward to avoid giving the bears any ideas. In March, Chainlink broke above the $20 level and a repeat performance would be ideal.
Still, volume has been fading since May 17. Therefore, I would still approach this idea cautiously.
On the date of publication, Josh Enomotoheld a LONG position in BTC, ETH, USDT and XRP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
