As with any other sector, the cryptocurrency market has largely traded sideways amid the debt-ceiling fiasco, posing concerns for individual cryptos, both big and small. Essentially, virtual currencies may face troubles irrespective of whatever happens with the national obligations debate. Therefore, a conservative approach overall may be beneficial.
On one hand, it’s quite possible that both Democrats and Republicans may fail to reach an agreement. According to a Reuters report, a meeting between President Joe Biden and House Speaker Kevin McCarthy ended with no deal. To be sure, both sides vowed to keep talking. However, a protracted default risks job losses numbering in the millions, per a White House statement. Obviously, that wouldn’t be too helpful for cryptos.
However, advocates of digital assets shouldn’t pop the champagne if a deal materializes. According to a CoinDesk report, if Congress decides to raise the debt limit, the U.S. Treasury may look to build back its cash balance by issuing government bonds. However, this action might cause upward pressure on bond yields.
Given that cryptos tend to have an inverse relationship with yields, securing an agreement might mean lower virtual currency prices. With that, below are seven blockchain-derived digital assets to watch.
As the benchmark of all cryptos, Bitcoin (BTC-USD) naturally carries many responsibilities in the blockchain ecosystem. Therefore, its sideways price action has been a distraction amid the troubling debt-ceiling impasse. Over the past seven days through Monday night, BTC gained roughly 0.3% of market value. However, it did pop about 1.6% over the past 24 hours.
Looking at the charts, Bitcoin clearly struggles for momentum. At the moment, the BTC price is a few bucks above the $27,000 level. Notably, it’s trading below its 50-day moving average, which stands at $28,332. Down below is its 200 DMA, currently sitting at $22,652.
One major observation to keep in mind is the volume trend. Since roughly the middle of March of this year, volume largely faded. That has been problematic to Bitcoin because, for many sessions, its rising price was not confirmed with rising volume. As well, investors need to be aware of the possibility that BTC could be in the middle of charting a bearish head-and-shoulders pattern. Therefore, caution is key here.
Consistently ranking as the number two most valuable digital asset among all cryptos, Ethereum (ETH-USD) advocates at one point had visions of overtaking Bitcoin for the number one spot. These days, ETH traders have more modest goals, seeking instead to regain the $2,000 level. Over the past seven days, Ethereum has shown better mobility than Bitcoin, gaining 1.5% of market value.
Also, in the trailing 24 hours, ETH popped up more than 2%. Nevertheless, the popular altcoin (or alternative cryptocurrency) features similar issues impacting rival cryptos. For one thing, ETH trades at $1,835, which sits below its 50 DMA of $1,889. To be sure, ETH trades well above its 200 DMA, which sits at $1,568.
However, looking at the charts, Ethereum also appears to be forming a bearish head-and-shoulders pattern. Therefore, it needs to regain momentum, especially because it also suffers from fading volume. Still, with the backdrop of the debt-ceiling debate, investors may want to wait on the sidelines for more clarification.
Contrary to most other cryptos, the main incentive undergirding Tether (USDT-USD) isn’t price speculation. Rather, as a stablecoin, USDT offers wealth preservation of sorts. While staying in hard fiat currencies offers the most stability, the conversion process involved with fiat and digital assets can be cumbersome and time-consuming. Therefore, with USDT offering a one-to-one peg to the dollar, investors can “freeze” their wealth in the blockchain.
Of course, the advantage of holding wealth in USDT is that traders can advantage of opportunities in the blockchain ecosystem immediately. On the flip side, losses in Tether or other cryptos aren’t protected by government authorities. As cryptos themselves face downside risk, certain dangers exist in holding too much wealth in digital assets.
Indeed, another CoinDesk article pointed out that Tether’s trading volume fell to multi-year lows. To clarify, I’m not suggesting that USDT will fail because of this dynamic. It’s a complicated narrative. However, the lack of volume may suggest that most investors are waiting for clarification. Therefore, it might not be wise to make audacious moves in cryptos right now.
Undergirding the Binance network – the biggest exchange for cryptos globally based on daily trading volume, per Coinmarketcap – BNB (BNB-USD) commands considerable influence. However, it hasn’t been immune from the softness of digital assets. In the trailing seven days, BNB gained a bit under 1%. However, in the past 24 hours, it popped up approximately 3%.
Nevertheless, like the other cryptos on this list, BNB faces a contested road ahead. Presently, the coin trades hands at a few pennies under $315. That slows beneath the 50 DMA, which currently stands at $321. On the other side of the equation, its 200 DMA sits at just over $300.
As with several other coins and tokens, volume levels have been rather subdued for BNB. From the end of April to the beginning of May, volume conspicuously faded. Ideally, the bulls would like to see more participation. Unfortunately, broader concerns about the debt default cloud both stocks and cryptos.
Unique among cryptos for catching the ire of the U.S. Securities and Exchange Commission (SEC) and suffering a lawsuit because of it, XRP (XRP-USD) – or more specifically, XRP founder Ripple Labs – also enjoys an opportunity not afforded to other blockchain projects. Basically, if Ripple emerges victorious in the suit, XRP would then presumably enjoy legal precedence as not being a security.
Recently, Bitcoinist published an article suggesting that the opposition believes there are “reasonable grounds” to conclude that XRP doesn’t satisfy all the elements of the Howey test that would make an asset a publicly traded security under federal law. To be sure, the presiding court has not handed down a ruling yet. However, it’s possible that XRP could enjoy a legal tailwind.
For now, XRP hasn’t demonstrated any movements to suggest that it’s that much more well-off than other cryptos. Yes, XRP gained about 10% in the trailing seven days. However, at 46 cents, it trades below its 50 DMA, which clocks in at 47 cents. Still, it’s one of the blockchain assets to watch because of its unique circumstances.
One of the most popular altcoins for its ultra-low price and extreme mobility in the charts, Cardano (ADA-USD) has struggled since popping to an intraday high of 46.2 cents during the mid-April session. Currently, ADA trades hands at 37.3 cents, more than 19% below its peak this year.
As with the other cryptos on this list, ADA finds itself sandwiched between its 50 DMA at the top (39.1 cents) and the 200 DMA below (35.1 cents). In the trailing seven sessions, ADA gained 2%. And in the past 24 hours, it jumped over 3%. However, investors will probably want to see more substantive and consistent performances.
A familiar observation in volume trends helps define the present ambiance for Cardano. Leading up to the mid-April session, volume levels increased. However, since April 15, volume declined conspicuously, leading to viability concerns moving forward. For those who aren’t extreme speculators, the sidelines may be a more reassuring place. With questions about broader stability weighing on global capital markets, you don’t want to make too big a move.
With perhaps the majority of blockchain projects, the underlying advocates often take their ambitions very seriously. However, with Dogecoin (DOGE-USD), it’s generally the opposite framework. That’s not to say that astute individuals keep away from DOGE. However, the network and the broader community tend to avoid grandiose directives. Instead, the point is about having fun and building the aforementioned community.
As I’ve stated in many prior InvestorPlace publications, I appreciate the straightforward approach of Dogecoin. You’re not going to hear virtue signaling about how the blockchain will solve world hunger or cure some fatal disease. No, the usual topics center on securing 10 baggers and whatnot. Still, just because Dogecoin is a fun ecosystem doesn’t mean that entertainment alone can bolster its valuation. From the standpoint of technical analysis, DOGE represents one of the worst cryptos. Right now, it trades hands at 7.4 cents, below its 50 DMA (8 cents) and 200 DMA (8.2 cents).
Due to DOGE’s volatility, I’d be super careful. A poor outcome regarding the debt-ceiling issue could sap the fun completely out of Dogecoin.
On the date of publication, Josh Enomoto held a LONG position in BTC, ETH, USDT, and XRP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.