Given the wild ebb and flow of individual cryptos to buy, it was perhaps inevitable that a cooling-off period would materialize. That moment arrived late in the weekend, with the total market capitalization of all virtual currencies slipping to around $1.57 trillion on Sunday. And that followed up with a Monday drop to roughly $1.52 trillion.
But make no mistake about it: blockchain advocates have made their voices heard loud and clear. For one thing, there’s the immediate bounce-back recovery to the $1.57 trillion level in early Tuesday morning trading. Second, fundamental speculation ramped up about the Federal Reserve eventually cutting interest rates next year. Of course, that would be a phenomenal development for cryptos.
However, I’m personally skeptical about the concept. With strong forces pushing up the labor market, I just don’t see how cutting rates would be appropriate. I’m no central banker but generally speaking, you cut rates when the economy suffers recessionary conditions. On the flipside, you raise ‘em when the economy is overcooked, lest you risk a sharp correction.
No, with cryptos, millennials and the emerging Generation Z may have made their choice about their preferred investment class. And that will make the below decentralized assets intriguing.
Bitcoin (BTC-USD)
What it is: The granddaddy of them all, Bitcoin (BTC-USD) symbolizes the genesis of cryptos to buy and the broader blockchain ecosystem. Investopedia offers a nice, tidy definition: Bitcoin is a crypto or virtual currency “designed to act as money and a form of payment outside the control of any one person, group, or entity, thus removing the need for third-party involvement in financial transactions.”
Analysis: Down about 1% in the trailing 24 hours, it’s important to contextualize the recent losses in Bitcoin. Yeah, the red ink might be ugly but over the past one-week period, BTC only slipped less than 1%. Speculation about a spot Bitcoin exchange-traded fund has vigorously bolstered sentiment. Also, next year’s halving event has investors licking their lips.
Pros: Fundamentally, Bitcoin could be responding well to speculation toward interest rate cuts. Even modest relief in borrowing costs may eliminate monetary policy as a headwind.
Cons: According to TipRanks, net network growth and the number of large transactions (greater than $100,000 worth) are less than normal, which suggests surprisingly bearish sentiment.
Ethereum (ETH-USD)
What it is: The number two cryptocurrency by market cap, Ethereum (ETH-USD) represents the backbone of blockchain applications. According to Investopedia, Ethereum is a decentralized global software platform undergirded by blockchain innovation. Its native crypto is ether or ETH. Unlike Bitcoin, Ethereum utilizes the proof-of-stake (PoS) protocol for verifying transactions in its blockchain network.
Analysis: Over the past 24 hours, Ethereum slipped slightly more than 1%. Yes, it’s down conspicuously from its previous high. However, over the past one-week period, it’s down less than 1% to provide greater context. From the viewpoint of technical analysis, ETH runs clear above its 50-day moving average (at around $2,022), suggesting resilience.
Pros: According to TipRanks, ETH presently benefits from larger-than-normal accumulation among large holders’ positions. At face value, this metric indicates that whales may be using this time to load up on (relatively) discounted cryptos.
Cons: An interesting report by The Wall Street Journal warns that a Bitcoin ETF might not offer downwind benefits to ETH since an Ethereum ETF requires significant complexities that could hurt mainstream adoption.
Tether (USDT-USD)
What it is: Known as a stablecoin, Tether (USDT-USD) represents a type of crypto that’s pegged to a hard currency; in this case, the U.S. dollar. According to Forbes, traders use stablecoins like USDT to “make transfers between different cryptocurrencies or to move their investments into or out of fiat currencies.” Fundamentally, stablecoins allow traders to “freeze” their wealth in virtual currency terms rather than holding wealth in fiat currency.
Analysis: Because of its peg to the greenback, it’s difficult to analyze Tether in the traditional sense. However, USDT effectively represents the oil of the blockchain, providing the liquidity for cryptos to change hands swiftly. Still, it’s interesting that as of early Tuesday morning, USDT slipped below its 1:1 peg with the dollar. That might indicate fading demand, which runs counter to the broader bullish narrative.
Pros: Without being facetious in any way, USDT continuing to occupy the number three slot in terms of market cap symbolizes a win. If a blockchain bank run materialized, that would likely spell horrors for cryptos.
Cons: From TipRanks, Tether mostly incurs bearish stats, confirming the concerns over the sub-1:1 ratio. Specifically, network growth, concentration and large transaction stats rate sentiment as negative.
BNB (BNB-USD)
What it is: The native crypto underlying the popular Binance exchange, BNB (BNB-USD) epitomizes the oddity of cryptos to buy. After all, according to The New York Times, Binance founder Changpeng Zhao must remain in the U.S. as he awaits sentencing for violating federal money-laundering rules. You’d think that would impugn the credibility of anything associated with Binance, yet BNB has been surprisingly resilient.
Analysis: Unlike the majors of Bitcoin and Ethereum, BNB has been on the move. Over the past 24 hours, the coin swung up more than 7%. In the trailing one-week period, the cryptocurrency gained nearly 9% of market value. From its technical chart, BNB suffered a huge decline on Nov. 21. However, since Dec. 6, BNB has marched steadily higher, moving past both its 50 and 200 DMAs.
Pros: If BNB represents a forward indicator of any sort, investors in cryptos to buy should be encouraged. What’s notable about the recent rally from Dec. 6 is that rising volume has so far confirmed the rising price.
Cons: As with all cryptos – particularly the altcoins or alternative cryptocurrencies – volatility is the name of the game. Therefore, investors should be vigilant, especially with the money-laundering distraction.
XRP (XRP-USD)
What it is: Developed by Ripple Labs, XRP (XRP-USD) represents a digital asset geared for fast transactions. According to Cointelegraph, XRP is “used to transfer funds across borders at a low cost — trustlessly and instantly. Its primary use is to serve as a bridge currency to offer financial institutions a more cost-effective way to exchange both crypto and fiat currencies.”
Analysis: As you likely know if you’ve paid any attention to cryptos this year, XRP went parabolic in July following a favorable federal legal decision. For years, the U.S. Securities and Exchange Commission (SEC) imposed a dark cloud over XRP as it accused Ripple Labs of violating securities laws. Following a boom-bust effect, XRP is steadily marching higher, possibly boding well for other virtual currencies.
Pros: Looking at the technical chart, investors should find encouragement that XRP has found baseline support at its 50 DMA. And for several weeks, this running average has been staying above the 200 DMA.
Cons: With the SEC not letting go of scrutinizing cryptos with a fine brush, XRP isn’t out of the woods. Therefore, investors should be cautious about excessive exposure.
Solana (SOL-USD)
What it is: One of the fast-rising altcoins, Solana (SOL-USD) supporters bill the underlying network as one of the “Ethereum killers.” Focused on a fair and accessible canvas for blockchain development, SOL garnered intense popularity. Technically, Solana is a third-generation blockchain-based platform, offering high transaction speeds while maintaining a decentralized profile.
Analysis: While major cryptos to buy have incurred corrective price action, the same cannot be said about Solana. In the trailing 24 hours, SOL gained 3% of market value. And in the past one-week period, it shot up more than 20% at the time of writing. That’s massive and it also provides a point of encouragement. Previously, SOL – following a robust rally that began in October – appeared stuck in a rut. However, the bounce back confirms there’s more life left.
Pros: Again, I have to call attention to Solana’s bullish price action. It’s not just that SOL moved higher but it did so against an obvious downcycle among other cryptos. That might speak to broader enthusiasm, boding well for investors.
Cons: Volume levels have generally not confirmed the rising price of SOL since around November. So, investors should be cautious about volatility.
Avalanche (AVAX-USD)
What it is: Another popular altcoin, Avalanche (AVAX-USD) may be the one non-Bitcoin decentralized asset to watch. According to Investopedia, AVAX is a cryptocurrency and blockchain platform that rivals Ethereum. Just like its bigger competitor, Avalanche uses smart contracts to support various blockchain projects. Like Solana, many regard the blockchain network as a strong candidate for Ethereum killers.
Analysis: There’s not a whole lot to say here other than to pull up a chart. I prefer Stockcharts.com – use the ticker “$AVAXUSD” in the symbol box – because it shows the performance on a logarithmic scale. What you see is what you get and the upside momentum is stunning. Following a big jump from October through November, a second rally this month has obliterated the competition on a percentage basis.
Pros: Primarily, the dramatic rise in AVAX speaks well for other cryptos. Also, note the robust expansion of volume during the two rallies. That’s exactly what you want to see.
Cons: Primarily, the dramatic rise in AVAX speaks well for other cryptos to buy but not necessarily for Avalanche. Let’s face it – it’s way overheated right now.
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.
