7 Cryptos to Watch as Legal Trouble Hits the Blockchain
After a robust performance last week, circumstances seemed quite favorable for many of the top cryptos to watch. Unfortunately, Monday started with blues for the blockchain ecosystem, with several major coins and tokens in red ink. Towards the end of last week, the total market value of all digital assets moved towards the $1.2 trillion level. Currently, it is down to around $1.13 trillion.
Essentially, CNBC reported that the Commodity Futures and Trading Commission (CFTC) charged Binance for violating eight provisions of a trade in goods law “designed to prevent and detect money laundering and the financing of terrorism.” As the world’s largest crypto exchange to watch, Binance has significant influence in the crypto space. Therefore, many investors became nervous about the broader implications for blockchain-derived assets.
Interestingly, the volatility of cryptos to watch may have been telegraphed. As I pointed out last week, rising values for several individual coins failed to trigger a corresponding increase in volume. Such a contradiction usually indicates a low confidence rally, something to keep in mind when trading any asset class. Going forward, the unclear fundamental conditions also indicate that investors must approach the sector cautiously. Below are the top cryptos to watch this week.
Bitcoin (BTC-USD)
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Monday night, Bitcoin (BTC-USD) traded hands for just over $27,000. In terms of performance, BTC fell 3.3% in the last 24 hours. In the last seven-day period, it also gave up over 2% of its market value.
Last week I warned about the possible implications of the coin’s “megaphone pattern”. Should Bitcoin fail to break out of the 27K to 28K price range, a trip below both the 50- and 200-day moving averages would not be out of the question. Again, an important barometer to watch is the price to volume ratio.
In Bitcoin’s case, the price of the asset began to jump on March 11. During this time volume generally faded, which is not what you want to see in a bull. Essentially, robust price action should be aligned with robust trading volume across an army of investors. Unfortunately, only thin support appears to have boosted last week’s rally, hence the current struggles. For BTC to maintain positive momentum, it needs to start challenging the 30K barrier. Otherwise, a trip under 20K is tempting.
Ethereum (ETH-USD)
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Continuing to record as number two for all crypto based on market cap, Ethereum (ETH-USD) ended up losing almost 4% of its market value in the last 24 hours. However, it managed to narrow its losses compared to Bitcoin in the last week, losing 1%. Currently, ETH is trading hands at just over $1700.
As with other cryptos, one of my biggest concerns about Ethereum was the printing of the megaphone pattern. To be fair, this chart pattern has both bearish and bullish implications. At the same time, the circumstances did not seem to be a good fit for ETH. In a similar framework to Bitcoin, Ethereum’s declining volume trend through March failed to match its rising price.
Higher prices for lower volume (participation)? That’s not just a warning sign for crypto, but for any listed investment category. To be sure, that’s not to say that ETH has zero chance of moving higher. But it needs to break out of the fund around the $1800 resistance barrier and start a charge to 2K. If not, the natural implication points to a drop to the 200 DMA ($1,437) or perhaps slightly lower.
Tether (USDT-USD)
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While speculation in capital gains attracts the most attention regarding cryptos to watch, stablecoins like Tether (USDT-USD) represents a critical cog in the flywheel. To use a car analogy, Tether plays the role of a (combustion-powered) car transmission, essentially transferring the power of the engine to the wheels.
In the realm of crypto, Tether represents the convenient gateway between fiat and virtual currency networks. Basically, a conversion process must take place from dollars (or other national currency) to digital assets. However, by holding dollar-denominated wealth in the form of stablecoins, it is much easier for traders to take advantage of the opportunities.
However, the platforms behind cryptos – including stablecoins – face the unlikely but not impossible threat of complete implosion. Therefore, investors must really decide whether the extreme risk exposure is worth it. Remember, the US government recently issued a statement protecting the institutions. However, it is highly unlikely that similar protections will be afforded to stakeholders in failed blockchain companies. So proceed with caution.
BNB (BNB-USD)
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With the spotlight glaring on GDP (BNB-USD), it’s no surprise that the digital asset underlying the Binance exchange suffered greatly compared to many other cryptos. In the last 24 hours, BNB fell almost 6% of its market value. In the last seven days, BNB fell more than 7%. Currently, BNB is trading at a hair above $310.
Given the legal issues surrounding Binance and the implications for crypto in general, BNB faces a significant hurdle going forward. Notably, BNB’s current price point is sitting at the 50 DMA (which is pinging at $309.71). As a bullish short-term target, BNB aims to take out the $350 level in a convincing manner. But to really inspire confidence, it needs to make a serious challenge for the $400 mark.
Honestly, it’s going to be a very difficult hurdle just based on the typical volatility of crypto. Address the legal ramifications and BNB could easily fall below the 200 DMA, which is at $290. In any case, a cautious approach is critical for BNB.
XRP (XRP-USD)
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While most cryptos to watch usually trade along Bitcoin’s path, there are some cases where certain coins or tokens diverge from the main trend. That’s the story with it XRP (XRP-USD) at the beginning of the week. A mixture of Ripple Labs, XRP has gained over 5% of its market capitalization in the last 24 hours. And in the last seven days, it increased more than 24%. That is higher than any other coin in the top 20 by market capitalization at the time of writing.
Fundamentally, it is possible that investors can expect a positive outcome from the US Securities and Exchange Commission’s (SEC) lawsuit against Ripple. If Ripple wins the legal battle – and that’s a big “if” – XRP will benefit from legal support. That will set the coin apart from virtually every other digital asset, and give it a huge advantage.
Interestingly, since last June, XRP has generally posted a series of rising lows. Still, it has some work to do. To establish real confidence, XRP needs to challenge the 80-cent level. Otherwise, shadowing other cryptos risks volatility.
Solana (SOL-USD)
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From one of the best performing cryptos to one of the uglier stories, Solana (SOL USD) has unfortunately struggled in recent sessions. Over the past 24 hours, SOL has faded to 4%. In the following week, the coin fell almost 12% in market value. It could be a do-or-die moment for the disputed asset.
Right now SOL is changing hands for $19.85 a pop. That’s slightly lower than the 50 and 200 DMAs, which essentially converged at $21.59. Therefore, at the bare minimum, SOL needs to get above $22 to even think about generating broader upside confidence. But the narrative only gets more challenging from there. Technically, the $30 level has served as long-term resistance for the past few months. To trigger a credible rally, SOL must convert resistance into support. After achieving this goal, the $100 price target represents the next meaningful threshold. Otherwise, a return to the low teens may be in order.
Polka Dot (DOT-USD)
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Once generating excitement as a potential Ethereum killer, Polka dot (DOT-USD) is now sitting on the outside looking in. Ranked 12th among all cryptos based on market capitalization, it just lacks some momentum to break into the top ten. Losing 2.5% of market cap in the last 24 hours and almost 5% in the last week certainly doesn’t help.
Currently DOT is changing hands at $5.85 a pop. In particular, it goes below the 50 DMA ($6.32) and the 200 DMA ($5.98). Given that both indicators represent commonly seen barometers of market health, you’d like to see the DOT swing higher quickly if you’re a bull. Assuming it does, it still faces countless challenges. First, Polkadot needs to establish a support line at $7.50. In recent months, however, this price point acted as resistance. Clearly, the bulls need to turn this narrative around. From there, the DOT must mount a serious challenge for $20.
Unfortunately, if Polkadot doesn’t attract bullish momentum soon, I can see it falling towards $5, if not lower. Let the buyer beware.
As of publication date, Josh Enomoto had a LONG position in BTC, ETH, USDT and XRP. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Guidelines for publication.
