7 Cryptos to Watch as Blockchain Hits $1 Trillion Again

After weeks of trading below the all-important $1 trillion level, the market cap of all crypto finally broke the upside barrier, albeit just barely. Still, it’s a mini-milestone event, with blockchain advocates eager for a reversal in the Federal Reserve’s monetary policy. During the course of last year, the central bank tightened the money supply dramatically, which particularly alarmed the risk in asset classes. But with inflation easing, advocates are hoping for a strategic turning point.

It is not excluded that such a pivot could materialize, which bodes well for crypto. “Fed tightening appears to be easing and inflation less of a risk,” Charles Hayter, CEO of crypto data website CryptoCompare, said in an email to CNBC. “It is hoped that there will be more caution in rating increases globally.”

Still, investors should exercise caution. During the last major bull cycle, crypto reached a peak value of $545 billion in early 2018. Soon after, the sector’s total market capitalization plunged to around $140.5 billion at the end of March. In early May, the sector reached a value of around $302 billion, more than doubling before imploding again. In other words, be careful. Anything and everything can happen with crypto.

Crypto to Watch: Bitcoin (BTC-USD)

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Continuing its remarkable run higher, Bitcoin (BTC-USD) is at the time of writing a hair below $23,000. At the start of the year, BTC was trading hands below $17,000. Within a few weeks, contrarian gamblers were walking away with around 35% returns. Now the question is whether they should sell or continue digging in the hope of even greater returns?

What is even more impressive about Bitcoin and other cryptos is their resilience. Despite the bankruptcy of the digital asset lender Genesis Global Capital, BTC shrugged off the downside. Instead, the main catalyst underlying virtual currencies is likely to center on Fed policy. If it reverses its monetary tightening strategy, BTC could be off to the races.

Nevertheless, it is important to keep things in perspective. In February 2018, after an initial collapse in the Bitcoin price, BTC managed to rally about 32% before gradually sliding downwards. Therefore, investors need this rally to sustain for more than a month. Otherwise, the bears may take a bite out of the resurgence.

Crypto to Watch: Ethereum (ETH)

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Another name among cryptos that continues to impress onlookers, Ethereum (ETH-USD) started the year at about $1,200. Currently, ETH is trading hands at $1,635, representing a 36% return in less than a month. Even better in terms of technical analysis, ETH is now conspicuously above its 50 and 200-day moving averages.

Basically, Ethereum also managed to brush off the Genesis Global Capital bankruptcy along with other major cryptos. At the moment, however, all eyes are on the upcoming Shanghai hard fork. This protocol update targets a release from March 2023, and will allow withdrawal of Beacon Chain staked ether (ETH), per Coindesk.com. Ethereum developers also created a “shadow fork” to provide a test environment ahead of the Shanghai upgrade.

While circumstances bode well for ETH, investors should note that between April and May 2018, Ethereum doubled in value before sliding into blockchain purgatory. Therefore, investors should be careful not to bet too much on this and other cryptos.

Crypto to Watch: Tether (USDT)

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As a stable coin, Tether (USDT-USD) does not change its value significantly, and is linked one-to-one with the US dollar. In previous years, the argument for long-term ownership of Tether was somewhat reasonable. With the dollar steadily eroding purchasing power, investors had incentive to dabble in risky assets like crypto. However, due to the aforementioned change in Fed policy, crypto traders need to think carefully ahead.

For example, year-to-date at the time of writing, Tether gained 0.048% of its market cap. In comparison, the purchasing power of the dollar increased by 0.30% between November and December last year. Therefore, by simply holding onto plain old dollars, everyday individuals can get a bigger return just by sitting on cash.

To be fair, holding Tether allows stakeholders to acquire cryptos at lightning fast speeds. But since the Fed did not state with conviction that it will cut benchmark rates, virtual currencies remain a risky proposition. Combined with the implosion of other stablecoins, investors should be wary of overexposure to USDT.

BNB (BNB)

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Undergirding of Binance virtual currency exchange, GDP (BNB-USD) has an unfortunate spotlight on it, with competing platforms going bankrupt. Fortunately, BNB likewise took the recent controversies in stride, jumping higher along with other cryptos. In the following week, the coin gained over 7% of its market value. And in the last 24 hours as of this writing, it has increased by over 5%.

From a technical analysis point of view, BNB certainly looks encouraging, with today’s price above 50 and 200 DMA. At the beginning of the year, BNB traded hands for approximately $244. As I write these words, it’s up close to $322, representing a 32% return.

Although impressive, between March and June 2018 BNB underwent a recovery rally after the correction in January of the same year. From a low of about $8 to a high of around $17.27, BNB gained about 116% of its market value. Again, as impressive as this year’s 32% return is, investors need to keep everything in perspective.

Cardano (ADA)

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Although other crypto products posted decisively encouraging chart patterns, recovery has increased Cardano (ADA-USD) gives room for mild concern. Don’t get me wrong, Cardano has been nothing short of impressive. At the open of January, ADA traded hands for about a US quarter. Right now, however, ADA managed to run to just under 38 cents. Rounded up, we’re talking a sweet return of 52% – and Jan. isn’t even over yet.

However, what may bother some potential investors is that Cardano currently failed to break its 200 DMA. To be sure, it is close. The 200 DMA stands at 40 cents while the ADA trades at 38 cents, leaving a gap of 5% and some change. There is nothing in the crypto world. Nevertheless, it stands out because many other non-stablecoin digital assets went past their 200 DMAs.

Furthermore, despite Cardano’s stratospheric run, it outperformed as a dead-cat bounce in 2018. Between April and May of that year, ADA returned 149%. So yes, it’s great to be excited about crypto right now. But just keep everything in perspective.

Solana (SOL)

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Once labeled an Ethereum killer for its ability to promote high-speed transactions at a fraction of the costs associated with the ETH network, Solana (SOL USD) sparked a lot of interest among blockchain developers. Soon, investors strictly seeking the capital gain potential of crypto jumped on board, sending SOL to the moon.

Unfortunately, Solana was caught up with the infamous FTX bankruptcy. Although Reuters reported that Solana and FTX had little to do with each other, FTX founder Sam Bankman-Fried’s outspoken support for SOL saw the coin fall. Still, it enjoyed one of the most notable rallies in crypto this year. From around $10 per coin, the price jumped to almost $25.

Although newcomers to SOL are undoubtedly pleased, the digital resource still has a mountain to climb. Long term support is around $30. Therefore, Solana needs another 20% rally from here. Considering we’re talking about crypto, a 20% move is well within reason. Still, it’s worth treading carefully.

Dogecoin (DOGE)

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Although Dogecoin (DOGE USD) has a somewhat controversial profile due to his irreverent attitude, this renegade attitude also charms onlookers. If you consider some of the most popular cryptos, their underlying white papers aim for a better economy, a better world, or at least a better blockchain. With Dogecoin, the emphasis seems to be on community and having fun.

It’s not a particularly serious undertaking, but that’s why it’s so refreshing. With Dogecoin you gamble. Therefore, every time you buy DOGE, you know what you’re getting into. There is no cover in the sense of framing your speculation as a means to address world hunger.

Sure, DOGE has performed well in the year so far. Starting in January at around 7 cents, DOGE went up to 9 cents, returning 28%. Still, back in April 2018, Dogecoin gained 119% before finally falling and going sideways. Thus, it is okay to be a little skeptical about today’s rally.

As of publication date, Josh Enomoto had a LONG position in BTC, ETH, USDT, ADA and DOGE. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Guidelines for publication.