Although cryptos to watch have long represented an arena for pure speculation, they might now provide insight into broader sentiment for the capital markets. Naturally, virtual currencies are absorbing macroeconomic data such as Federal Reserve Chair Jerome Powell’s latest comments during last week’s Jackson Hole Economic Policy Symposium. For those banking on risk-on assets, the backdrop isn’t particularly favorable.
While Powell acknowledged that the Fed’s hawkish monetary policy has yielded some encouraging results regarding disinflation, it still has plenty of work to do. Specifically, a rise in the benchmark interest rate might not be out of the question, which of course casts a cloud over cryptos. Without a flow of cheap money, it’s difficult to justify betting on decentralized digital assets.
Further, the impact isn’t just theoretical. According to CNBC, the benchmark cryptocurrency saw trading volume fall sharply, down to its lowest level since Nov. 2018. Though it’s difficult to read too much into day-to-day data, cryptos to watch thrive on collective sentiment. The idea that traders may be packing it in doesn’t bode well for blockchain-derived assets.
On that note, cryptos to watch face a high-stakes game moving forward. Below are the key names to watch closely.
Cryptos to Watch: Bitcoin (BTC-USD)
Based on data from Coinmarketcap, Bitcoin (BTC-USD) trades hands for a little over $26,000 as of the late evening of the Aug. 28 session. Over the past 24 hours, BTC gained just under 0.2% of market value. Over the trailing seven days, the benchmark virtual currency also moved up very modestly, about 0.15%. With a market capitalization beneath the $508 billion mark, Bitcoin is at a psychological crossroads.
As the aforementioned CNBC report pointed out, Bitcoin volume fell sharply. Further, circumstances may worsen before they improve. Per the business news outlet, “[t]he U.S. regulatory crackdown on crypto combined with the end of the banking crisis in May (which accounted for much of its year-to-date gains) drove market makers and traders away – and they haven’t had a reason to return.”
Looking at blockchain analysis data from Coinpaprika, a major positive for Bitcoin is that at the current price, 58% of stakeholders are in the money. However, to corroborate the declining volume story, transactions greater than $100,000 have trended down over the past week. This framework could have negative implications for other cryptos.
Ethereum (ETH-USD)
Heading into the beginning of the Aug. 29 session, Ethereum (ETH-USD) traded hands at $1,652. Over the trailing 24 hours, ETH barely moved up over the breakeven line. As for the last seven days, the number two blockchain asset by market cap slipped just under 1%. Notably, Ethereum’s market value sits just beneath the $200 billion level, indicating another crossroads moment.
Similar to blockchain analysis data for Bitcoin, a clear positive exists for ETH. At the present price, 52% of stakeholders are in the money. Only 44% are out of the money and 4% are in the money. However, transactions greater than $100,000 have also trended down over the past week. Unfortunately, fading volume for the major cryptos may impose a downwind impact.
Regarding technical analysis, I believe Ethereum is in trouble unless the bulls can muster an immediate comeback effort. At its current level, ETH trades below both its 50 and 200-day moving averages. More significantly, the flat price action following a sharp drop on Aug. 17 may court bearish attention.
Cryptos to Watch: Tether (USDT-USD)
As a stablecoin, Tether (USDT-USD) doesn’t operate under the same ethos or directive as most other cryptos to watch. Rather than gamble on capital gains, Tether – pegged to the U.S. dollar – presents a form of wealth holder. However, the distinction here is obviously that USDT allows wealth to be held within the blockchain, so to speak. Therefore, active traders can advantage of opportunities without going through the cumbersome fiat-to-crypto exchange.
However, a possible problem arises when the volume of the major cryptos fades away. Simply, if people aren’t interested in trading virtual currencies – and that’s the implication behind the aforementioned CNBC report – then there’s really no need to have that much wealth in Tether.
Ironically, holding wealth in Tether may prevent equities traders from actualizing opportunities quickly due to the crypto-to-fiat conversion process. And to be frank, it’s a lot harder to trust blockchain-based mechanisms due to a lack of recourse. Also, note that Coinpaprika points out that only 46% of USDT stakeholders are at the money. And 28% are out of the money, meaning only 26% are in. That raises eyebrows for a so-called “stable” coin.
BNB (BNB-USD)
One of the best-performing cryptos among digital assets ranked in the top 10 by market cap, BNB (BNB-USD) popped up nearly 4% over the trailing one-week period. As of this writing, that’s better than every other top 10 virtual currency by a wide margin. However, its trailing 24-hour return of just 0.14% is hardly remarkable.
Still, even with the relatively impressive performance over the past seven days, BNB is not immune to the challenges facing digital assets. Right now, BNB – formerly known as Binance Coin – trades hands at just under $218. However, its 50 DMA comes in at $235.64. Even more glaring, its 200 DMA stands at $281.84, meaning that BNB suffers a significant credibility concern.
However, if a positive exists, it’s in the coin’s order book. Right now, the volume of bids outweigh asks by $114.49 million to $88.74 million. While you don’t want to use any one indicator as your only decision-maker, higher bid volume relative to asks may indicate higher demand than supply for BNB at its current $218 price. Of course, you’ll want to apply caution here given the broader negative backdrop for cryptos.
XRP (XRP-USD)
Almost a month-and-a-half ago, XRP (XRP-USD) couldn’t get enough attention. To quickly recap, XRP creator Ripple Labs secured a critical legal victory or so it seemed at the time. However, the U.S. Securities and Exchange Commission (SEC) moved to appeal the XRP ruling, which seemingly afforded legal clarity for the blockchain asset. Now, it’s in the same boat as many other cryptos.
Per data from Coinmarketcap, XRP gained a very modest 0.17% over the past 24 hours. And in the trailing seven days, XRP missed reaching parity by a margin of 0.14%. Either way, circumstances don’t look that appealing. Currently priced at 52 cents per unit, XRP is barely above its 200 DMA, which sits at 50 cents. Conspicuously, its 50 DMA stands at 64 cents, a byproduct of earlier positive sentiment.
Adding to the dour framework, XRP’s order book shows asks outweighing bids, though to a small margin: $197.22 million compared to bids of $188.83 million. In this case, it’s possible that at 52 cents, more supply exists than demand. Therefore, it’s probably better to be cautious.
Solana (SOL-USD)
A decentralized asset that really needs to show momentum soon, Solana (SOL-USD) presently trades hands at $20.65. Over the trailing 24 hours, SOL managed to swing up nearly 1%. Comparatively, that’s a strong performance among cryptos ranked in the top 10 by market cap. However, it did suffer a loss of more than 2% in the past week.
Against a technical framework, SOL sits just below its 200 DMA, which comes in at $21.34. Further, its 50 DMA stands at $23.59. While there’s not much that separates Solana from breaking through these key psychological barriers, it has shown frustrating weakness. Also, volume levels have been steadily declining since around mid-July. So, SOL bulls need to pick it up before it starts tempting bearish traders.
To be fair, Solana could be one of the speculative cryptos that could swing higher. At the time of writing, its order book shows bids outpacing asks by a large margin: $285.62 million compared to $138.61 million. Again, this framework implies greater demand than supply at SOL’s price of $20.65.
Dogecoin (DOGE-USD)
Although originally created as a joke, Dogecoin (DOGE-USD) continues to have the last laugh. Despite the sharp volatility and unpredictability of cryptos, DOGE holds the number eight spot for total market cap. Love it or hate it, you have to respect the meme coin – and its underlying community – for maintaining such a lofty status. But, will it matter moving forward?
Per Coinmarketcap, DOGE gained 1.31% in the trailing 24 hours, making it a top performer under this framework. As well, its return of 1.34% in the trailing seven days is relatively strong. Nevertheless, DOGE suffers from technical challenges. At its current price of 6.3 cents, it sits noticeably below its 50 DMA (at 7.1 cents) and its 200 DMA (at 7.4 cents).
Another challenge? Since the July 25 session, DOGE’s volume – which wasn’t that robust – has been declining. If the faithful followers of Dogecoin are losing interest, that might signal problems for other cryptos.
One thing to watch out for, per Coinpaprika’s blockchain analysis, is the stakeholder position. At the current price, only 41% are in the money while 56% are out. Therefore, volatility could be in order if the blockchain environment doesn’t improve.
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.
