7 Cryptos to Watch as Blockchain Bounces Back
Some of the hottest cryptos to watch are pushing higher, proving that the underlying blockchain ecosystem is never truly predictable. Nevertheless, investors still need to exercise caution. First, we’ve seen this narrative play out before. As virtual currencies soared to record highs in late 2017/early 2018, valuations plummeted. However, a surge in the spring of 2018 – in which digital assets almost doubled in value – led to optimism that ultimately failed.
After that implosion in 2018, cryptos would go dark for a few years before skyrocketing again in late 2020. The point here is not to discourage, but rather to encourage healthy skepticism. You don’t want to get too emotional and lose your discipline.
Another factor to consider is that the Federal Reserve is unlikely to reverse its hawkish monetary policy based on a favorable inflation report. If successful, it will undo all the sacrifices made to get to this point. Furthermore, inflation is not only about the supply of money, but the speed. Since the latter calculation increased significantly in 2022, the Fed can still tighten the money supply.
Again, let me emphasize: you should remain disciplined in your approach to all cryptos.
Bitcoin (BTC-USD)
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After messing around the $16,000 level for so long, Bitcoin (BTC-USD) jumped significantly higher, just as it needed to do. At the time of writing, BTC claimed a stake slightly above the 21K price point. To be sure, it is an encouraging situation, with the coin blowing past both the 50 and 200-day moving averages. But now the real work begins.
Based on blockchain analysis from Coinpaprika.com, Bitcoin is still pinging bearish signals. However, at today’s price, 59% of holders make money while only 38% lose. In my view, this is a mixed bag. On the one hand, optimism breeds more optimism. But on the other hand, too much speculation (especially in a risky environment) can go disastrously wrong.
Again, I’m reminded of Bitcoin’s ebb and flow after the 2017 bull run and subsequent implosion. In February and April 2018, BTC speculators enjoyed two upward spikes, followed by fairly rapid declines. For conservative investors, it is important to be vigilant and not get emotionally attached to the latest crypto developments.
Ethereum (ETH-USD)
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The same discussions above apply to Ethereum (ETH-USD). For several months, price action wound around the $1,200 level. However, Ethereum seemingly made up for lost time in one fell swoop, rising to just below the $1,600 price point. From here you would really like to see ETH reach $2000 and establish a credible base there before moving back up.
That’s not to undermine ETH’s recent rally, which admittedly impressed onlookers. Still, just like with Bitcoin, Coinpaprika notes that ETH is mostly sending out bearish signals. Currently, among stakeholders at the time of writing, 59% are profitable. Only 38% are not, while the remaining 3% are on the money. Once again, I think this presents a mixed bag. It may attract potential traders, but circumstances can always go wrong with crypto.
Finally, remember that ETH stumbled into April after hitting a then-high in January 2018. It then skyrocketed from there, suggesting a resurgence. Alas, it was not to be, suggesting that investors need to take precautions this time around.
Tether (USDT-USD)
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Theoretically, Tether (USDT-USD) should represent one of the “safest” trades in the crypto world. A stablecoin, USDT is pegged to a one-to-one relationship with the dollar. Therefore, on paper, you should not lose money when converting fiat currencies to Tether.
However, according to Coinpaprika’s blockchain analysis, only 43% among current stakeholders have the money with USDT. Also, 17% are in the money (profitable) while a staggering 40% are out of the money. Due to everyday fluctuations, stablecoins can occasionally “beat” the dollar peg, thus facilitating (often microscopic) profits.
Nevertheless, the implosions of once strongly followed cryptos (even those that were stablecoins) confirm that nothing is truly safe. Sure, you can also say that the dollar is not safe. Fair enough. However, it is also fair to say that most people will trust the support of the US government over blockchain-based promises. Therefore, even with Tether, you need to be careful.
BNB (BNB-USD)
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As with most other cryptos, GDP (BNB-USD) has had a dramatic swing higher in recent days. In the following week from the time of writing, BNB managed to gain over 9% in market value. This performance put the coin above both the 50 and 200 DMA. In doing so, it effectively made up for many months of disappointing price action.
The hard work is still ahead of BNB. From a technical point of view, BNB needs to start moving towards the $400 level to gain investor confidence. While it doesn’t reject the recent peak higher, it’s also not uncommon for cryptos to generate such moves (in both directions). However, $400 also symbolizes the minimum requirement for BNB. Remember, it rang in 2022 at around $500.
Currently, Coinpaprika’s data shows that BNB’s overall order book favors the bears ($203.67 million bids vs $202.82 million bids). I would like to see BNB move convincingly higher and soon. Otherwise, the sideways action presents major concerns.
Cardano (ADA-USD)
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One of the biggest winners in the recent spike higher in crypto is Cardano (ADA-USD). Cardano lost favor through 2022 to more exciting or trending digital assets, gaining much-needed bullish support. In the last week, ADA gained about 11% of its market value. Significantly, it managed to break up the implications of its long-term downward spiral by moving above the 50 DMA.
That’s a lot of progress, so let’s give credit where it’s due. However, what makes ADA interesting compared to other cryptos is that at the time of writing, the coin’s price (35 cents) is below the 200 DMA (40 cents). Over the past 24-hour period, the ADA fell by approximately 3%. That’s a significant loss compared to cryptos ranked in the top 10 by market capitalization.
Going forward, ADA needs to gain control of the 40-cent level, where its 200 DMA stands. That is the minimum. Until last April, Cardano traded hands above $1. Unfortunately, it has a long way to go before credibility is restored.
Filecoin (FIL-USD)
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Essentially, Filecoin (FILE-USD) offers one of the most sensible platforms. Focused on building a data storage network, the Filecoin project theoretically creates a symbiotic relationship. Users can go to the platform for their data storage needs. At the other end of the aisle, anyone with extra storage space can contribute it to the system. In return, they receive crypto (reward tokens).
Unfortunately for FIL stakeholders, the compelling nature of the blockchain enterprise did not spare the underlying asset volatility. However, in line with other cryptos, Filecoin saw a sharp swing higher recently. Currently, FIL’s price point ($4.57) ranks well above its 50 DMA ($3.73). However, it also suffers from the Cardano problem, slipping below the 200 DMA ($5.30).
And like the ADA, there is a minimum requirement for FIL to move up to $5.30. Basically, this level represented long-term support in the back half of last year. But FIL started 2022 at about $35. Therefore, Filecoin unfortunately has a mountain to climb before it can regain its credibility.
ApeCoin (APE-USD)
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From one of the most sensible platforms in crypto to the more speculative, ApeCoin (APE USD) garnered a lot of interest last year. Back in April, APE jumped above the $26 price point. But just as quickly as it did, the meme coin cratered. In stark contrast to many other cryptos, ApeCoin did not enjoy a resurgence in the second half. The ebb and flow remained below the $8 level, frustrating new stakeholders.
Recently, however, ApeCoin managed to join the ride. At the start of the new year, APE hands traded for less than four dollars. Right now the market is pricing the token at $5. At its peak, it reached just below the $5.50 mark. There is progress, but again, the real work lies ahead. Frankly, it’s hard to imagine that APE and other meme coins will regain their previous momentum anytime soon. Shortly after its introduction, APE began changing ownership at $14. For ApeCoin to regain investor confidence, it is important that it reaches $8. Otherwise, this could be a bull trap.
As of publication date, Josh Enomoto had a LONG position in BTC, ETH, USDT and ADA. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Guidelines for publication.
