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Fundamentally, cryptos face a major wall of concerns. As loyal as the ardent blockchain supporters may be, money is not an unlimited resource. As the Federal Reserve Bank of St. Louis pointed out, while disinflationary trends have brought some encouragement, inflation remains stubbornly elevated. Naturally, this dynamic raises the prospect of higher interest rates, which would not be great for virtual currencies.
Another thing to consider is the increase in mass layoffs. Last year, the pink slips flew through the technology sector. However, currently, people are losing their jobs across several industries. We are not talking about a hamburger-and-fries type of employment but rather at renowned institutions. On the other hand, monetary policy decisions do not happen in a vacuum, putting cryptos under a dark cloud.
However, let’s give credit where it’s due. Unlike some self-stocks, cryptos have shown tremendous resilience and it’s not just based on technical rumblings. With anticipation racing for approval for a spot crypto exchange-traded fund, robust enthusiasm has once again returned to decentralized digital assets. Rising above understandable concerns, there might be something to this rally.
However, investors will want to maintain vigilance, leveraging solid analytics over apocryphal claims shrouded in survival bias. On that note, below are cryptos to consider.
Bitcoin (BTC-USD)
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Sparking another impressive rally, Bitcoin (BTC-USD) only gained about half a percent in the past 24 hours of Monday night trading. However, over the past seven days, BTC has gained almost 3%. Also, the current price tag stands well above the $37,000 level. At this point, the benchmark crypto only needs to gain about 7% to hit the all-important $40,000 milestone.
Could it get there? That’s the hard part. For those who care about the emotions of the fear of missing out (FOMO), putting some capital to work here might not be the worst idea. However, I would question going all-in and that’s because of less-than-stellar blockchain analytics. In particular, BTC’s on-chain signals show a consensus bearish sentiment.
Notably, net network growth – which provides true growth statistics of the underlying cryptocurrency network – sits at 0.3%, which is historically low. Large transactions (defined as anything greater than $100,000) also fell to 0.26% below zero.
On the positive front, 79% of Bitcoin owners are in the money. Therefore, it is possible to expect greater support.
Ethereum (ETH-USD)
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Although not quite synonymous with cryptos like Bitcoin is, Ethereum (ETH USD) because the number two decentralized asset by market capitalization commands great influence. For ETH, the main point for bulls is that it continues to hold the critical $2,000 level. Over the past 24 hours, the coin has gained 1.3% of market value. However, in the following seven sessions, it dipped about half a percent.
However, ETH’s resilience against broader pressures conspiring against the consumer economy offers encouragement. However, the question of forward progress haunts objective market observers. What raises eyebrows here are the chain signals. With the consensus sentiment coming in as unanimously bearish, this framework should give prospective investors pause.
Notably, net network growth for Ethereum sits at just 0.19%. Also, the concentration of the position of large holders in ETH witnessed a 0.18% decrease. Finally, large transactions make up only 1.42% of the total, a historically low statistic.
To be fair, Ethereum’s 50-day moving average is on the cusp of breaking above its 200 DMA, which is positive. However, I would cautiously roll into this coin if you are bullish.
Tether (USDT-USD)
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For those new to crypts, dedicating space to Tether (USDT USD) may seem strange. As a stable coin or digital asset linked to hard (fiat) currency, USDT does not respond to capital market fluctuations in the traditional sense. Instead, Tether “freezes” wealth within the context of the blockchain, enabling convenience in blockchain transactions. However, major stablecoins effectively provide liquidity, thus making it integral for virtual currencies.
What continues to raise attention are the bearish signals emanating from its on-chain data. As with Ethereum above, Tether is suffering from unanimous bearish signals. Most pressingly, the USDT concentration of large holders saw a reduction of 0.36%. Also, USDT tokens that are “in the money” (ITM) sits at 0.3% below zero. Mainly, this suggests that Tether has spent a significant amount of time trading below its one-to-one peg with the dollar.
Certainly, this is not a catalyst for panic. However, it is also important to note that cryptos lack central regulation and therefore do not enjoy protections. Therefore, you want to keep your exposure modulated based on your personal risk tolerance.
Remember, the Federal Deposit Insurance Corporation (FDIC) does not insure any crypto exchanges.
Solana (SOL-USD)
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Coverage based on popular demand, Solana (SOL USD) continued its stratospheric ascent. While in the past 24 hours, SOL has only gained a little less than 1%, over the subsequent one-week period, SOL has swung by 6%. That makes it one of the best cryptos within the top 10 by market cap. At the time of writing, Solana is trading hands at over $57, setting up an attractive proposition.
In earlier publications for InvestorPlace, I stated that Solana needs to break out of the long-term support line of around $33, which has recently served as upper resistance. Obviously, the coin has blown past this ceiling, which is the good news. Also, the level where it currently stands represents a historical inflection point.
However, the not so good news is that the next level of major support lands around the $90 to $100 range. Clearly, the bulls have returned to Solana, which lends credence to the story. However, volume has been decreasing since the beginning of November.
Typically, you would like to see volume confirm rising price action, which may suggest a pause in the action. However, for speculators, SOL is one to watch closely.
XRP (XRP-USD)
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While Bitcoin has recently grabbed the spotlight thanks to speculation about spot BTC ETF approval, XRP (XRP USD) – which specializes in ultra-fast transactions suitable for micropayments – has enjoyed most of the attention. In July, XRP went parabolic like its founder, Ripple Labs, secured a critical legal victory against the US Securities and Exchange Commission (SEC). However, the regulatory agency appealed, causing a wild backlash.
Indeed, encouraging news from the ongoing legal drama helped fuel sentiment in XRP, sometimes colloquially known as Ripple coin. Certainly, since the November 6 session, XRP has taken a considerable dip. At the same time, as mentioned earlier, fundamental support seems strong. With XRP still trading above its 50 and 200 DMAs, it may be worth a speculative pocket.
Also, XRP could be a leading indicator for other cryptos, with its rally fading since November 6. If so, that lends credence to the idea that investors should roll slowly into virtual currencies instead of going all-in at this point. It’s still possible for a correction to materialize, meaning caution is still key.
Chainlink (LINK-USD)
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Another possible leading indicator for cryptos could be chain link (LINK USD). One of the most popular altcoins during the post-pandemic boom, LINK later went on a long stretch of side trading. However, since the second half of October, the blockchain asset has seen a dramatic reversal of fortune. Trading hands at around $7, it now stands at $14.45 at the time of writing.
Of course, during the rise, volume levels rose from previous standards. However, accumulation has started to noticeably decrease in the last few sessions. Not surprisingly, LINK slipped about 4% in the subsequent 24 hours. Over the past one-week period, it has declined more than 1%. Could an imminent correction be in the works? It sure looks that way. If so, patience may be key, not only for Chainlink but for other cryptos.
Interestingly, TipRanks shows that the LINK chain signals point unanimously in a bearish direction. Obviously, the concentration of large owners decreased by 0.28%. Also, net net growth only came in at 0.34%, a historically low statistic.
Finally, only 55% of owners are ITM. Therefore, Chainlink could be susceptible to selling pressure from the weak hands of the market.
Avalanche (AVAX-USD)
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Another attractive cryptocurrency, Avalanche (AVAX USD) represents layer one blockchain, an underlying protocol that forms the foundation for a decentralized network. According to CoinMarketCap, Avalanche serves as a platform for decentralized applications and custom blockchain networks. It is a key rival to Ethereum, with developers looking to usurp ETH as the most popular blockchain for smart contracts.
Although fundamentally important, AVAX suffered along with other cryptos last year. With inflation skyrocketing and the Fed issuing aggressive interest rate hikes, risky assets have lost much of their support. However, with the newly revitalized feeling, AVAX tried to make up for lost time. Indeed, during the last one-week period, it appeared slightly more than 24%, making it one of the best performers among all virtual currencies.
However, even with the incredible gains, investors should be cautious. On-chain signals point to a unanimously bearish sentiment. As with other cryptos, the concentration of large holders decreased by 0.33%. Also, net net growth was minimal at just 0.34%.
From a tactical perspective, it’s good to have eyes on it. But with AVAX still overheated, caution is warranted.
As of 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 Publishing Guidelines of InvestorPlace.com.
A former senior business analyst for Sony Electronics, Josh Enomoto helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has provided unique, critical insights for the investment markets, as well as various other industries including legal, construction management and healthcare. Tweet him at @EnomotoMedia.
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