7 Cryptos to Watch as Bulls Return to Blockchain

With the recent positive developments in the cryptocurrency sector, it is tempting for investors to pick individual cryptos for upside success. While bullish sentiment has undeniably entered the space – with the total market value of all digital assets soaring conspicuously above the critical $1 trillion mark – market participants need to remain objective.

While every boom-bust cycle has its own nuances, no asset sector rises or falls in a linear fashion. In fact, bullish cycles often include healthy short-term corrections. That might be what’s happening with crypto right now.

However, remember the obvious point: Sensing capitulation is not the same as an actual bottom. Furthermore, since the underlying fundamentals – high inflation and a Federal Reserve likely to aggressively push for monetary tightening – are troubling for crypto, investors have good reason to be cautious.

This is not meant to scare people. It is better to prepare for the worst than to be caught off guard. With that, here are the cryptos to watch this week.

Bitcoin (BTC)

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Bitcoin (BTC-USD) has recently benefited from encouraging headlines when asset managers Black stone (SNEEZE:BLK) announced the launch of a private trust. This financial vehicle will hold BTC and seek to track the asset’s performance. Further, Coin base (NASDAQ:COIN) will act as the trust’s custodian.

Notably, in March of this year, “BlackRock Chairman and CEO Larry Fink wrote in his letter to shareholders that the war between Ukraine and Russia could potentially accelerate the use of digital currencies,” per Yahoo Finance. Over the ensuing month, BTC has risen around 19%. Nevertheless, it is also worth mentioning that on a year-to-date basis, BTC is down 55%.

Investors should realize that 56% of BTC stakes are in the money at the current price. Therefore, as the digital resource increases, you should find that this metric expands favorably.

Nevertheless, you should also be aware that any shock events – stock weakness, poor fundamental reports – could send BTC down rapidly. Unfortunately, you simply cannot relax in this market.

Ethereum (ETH)

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Ethereum (ETH-USD) is on the verge of a major breakthrough ahead of the merger. Essentially, developers run tests to ensure that the underlying network can handle the transition to proof-of-stake.

Scheduled to execute in September, Ethereum’s pivot to the proof-of-stake consensus mechanism should make the blockchain run faster and with more energy efficiency. One of the main criticisms of crypto has been that the underlying mining process uses too much electricity. According to the Columbia Climate School, Bitcoin mining uses “an estimated 150 terawatt-hours of electricity annually — more than the entire country of Argentina, population 45 million.”

Still, investors should be aware of the buy the rumor, sell the news phenomenon. Put another way, if everyone bets on the same horse, the subsequent rewards will be extremely limited.

Tether (USDT)

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With the entry of specialized cryptos such as Tether (USDT-USD) – a stablecoin pegged to the dollar – blockchain investors enjoy alternatives. For example, decentralized applications (dapps) enable everyday investors to earn rewards (interest) on their digital assets. A popular passive income mechanism involves lending out stablecoins like USDT for regular interest payments.

With prices that can go into the double digits, you cannot find a similar equivalent example in the fiat currency space. That’s the beauty of crypto. However, the ugly side of virtual currencies is that they can implode at any time. As the latest disaster involves Luna Classic (LUNC-USD) demonstrated, the sector can be brutal and capricious.

To be clear, I am not drawing a connection between Tether and Terra Luna. One remains a viable project, while the other struggles for a mere semblance of credibility.

Nevertheless, I firmly believe that the wise approach is to reduce your exposure to all stablecoins. Keep some fun money in USDT if you want – I do – but leave your core funds in cash.

Cardano (ADA)

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The recent enthusiasm surrounding Cardano stems from its leadership in proof-of-stake protocols. According to the project’s website, the blockchain platform is “the first to be based on peer-reviewed research and developed through evidence-based methods.”

One of the implications of Ethereum moving to the stake-based approach is that if the stake fails, Cardano and others may be able to pick up the pieces. According to the Blockchain Council, while Ethereum offers countless opportunities, several challenges exist. These include issues such as building future-proof architecture and the growing dilemma of network latency.

Still, traders seem to have shifted away from the above implications. Instead, they seem to buy the rumor and sell the news. According to liquidity data from Coinpaprika.com, asks (sell orders) have been higher than bids (buy orders).

Solana (SOL)

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Another name among alternative cryptos benefiting from Ethereum’s spotlight is Solana (SOL USD). As an Ethereum competitor, bullishness in SOL makes perfect sense.

Solana offers a deal many developers couldn’t say no to: speed, scalability and security. In addition, the platform ensures that transaction fees remain less than a penny for both developers and users.

That’s the good news. Unfortunately with crypto, the ebb and flow of the sector doesn’t always follow logic. Ominously, some technical analysts have called for a 35% correction in the SOL price.

Interestingly, as with Cardano, Solana’s order book showed offers outweighing bids over the weekend. Therefore, potential investors should watch SOL carefully. It is possible that a discount may come in the future.

Polka dot (DOTS)

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For those who have followed the latest iteration of cryptos, Polka dot (DOT-USD) will call familiar. Early in 2021, Forbes wrote an article about Polkadot, declaring it an Ethereum killer. According to Coinspeaker.com, Polkadot has several advantages over other blockchain-based projects. These include interoperability, scalability and the ability to build custom blockchains. Combined with rising Ethereum transaction fees (called gas), many developers saw a home in Polkadot.

Another clear factor that makes the DOT network stand out is intersection. Per Coinspeaker.com, “In a classic blockchain, validators must validate each individual transaction. However, the validation effort is distributed in Polkadot, allowing each validator to focus on a set of parachains rather than all of them. In this context, parachains are referred to as shards.”

But as with the other cryptos above, traders seem to be selling the news. As I write this, Polkadot’s order book shows that askers have outweighed bids. Therefore, some corrective action this week would not be out of the question.

Shiba Inu (SHIB)

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While “serious” investors often reject Shiba Inu (SHIB-USD) As a joke, the latest rush has been no laughing matter. Over the past month, SHIB has increased by more than 10%. Additionally, at the time of writing, Shiba is the No. 12 largest virtual currency.

Yes, chatter on social media focuses on how SHIB supplanted Avalanche (AVAX USD) for the honor. Considering that many investors consider AVAX a serious crypto project, Shiba Inu’s achievement is no small matter. Still, it begs the question: How did SHIB gain so much momentum?

In my view, there are some advantages to SHIB not fundamentally correlating with other mainstream cryptos. For example, while it is nice that blockchain projects promote ambitious goals, they risk a market correction if they fail to realize them. However, the Shiba Inu is not trying to eradicate global hunger or cure cancer. Rather, it is a fun platform for speculation.

It’s stupid, but it works. And that is the strange beauty of the Shiba Inu.

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.