Following a dramatic surge higher in the final days of October, cryptos to watch – particularly the major virtual currencies – have again captured mainstream attention. In the wee hours of the Tuesday session, the total market capitalization of the sector reached about $1.33 trillion. For context, in mid-October, this valuation sat at $1.06 trillion.
Still, now that crypto traders scalped a quick 25% return inside a month, what lies next? Fundamentally, two catalysts collide. On one hand, consumers may be showing signs of strain. In September this year, a report by the Federal Reserve suggested that consumers were done splurging. Outside factors, such as flatlining travel intention indicators and the demand implosion for electric vehicles corroborate the negative assessment.
Nevertheless, cryptos have typically enjoyed robust support irrespective of economic pressures. Moreover, the prospect of institutional support – via instruments such as spot market exchange-traded funds – has lifted enthusiasm. So, who should investors believe?
Obviously, it’s a tough issue for anyone to decipher. Because of the ambiguity, though, it’s now more important than ever to consider institutional sentiment; that is, what do large, well-capitalized market participants believe? That should be the key to analyzing the below cryptos.
Cryptos to Watch: Bitcoin (BTC-USD)
During the early hours of the Tuesday morning session, Bitcoin (BTC-USD) gained only marginally over the past 24 hours. However, in the trailing one-week period, BTC gained very roughly 2%, suggesting a slow grind higher. Technically, investors need to be cautious. Since the Oct. 20 session, BTC entered into overbought territory as determined by the relative strength indicator (RSI).
Still, with Bitcoin poking in and out of the $35,000 level, that appears a bullish sign. However, data from TipRanks reveals that as of this writing, the various signals that the investment resource covers indicates a “mostly bearish” framework. In particular, large transactions – defined as transactions greater than $100,000 in value – represented only 0.63% of all BTC activities.
Additionally, net network growth – or the inclusion of new addresses in the ecosystem – landed at only 0.32%, which is low. Stated differently, both retail and institutional investors may be cautious about Bitcoin. That wouldn’t be surprising given its overheated nature. Therefore, prospective investors may want to wait a few sessions before diving into this and other major cryptos.
The seemingly perennial number two among cryptos to watch, Ethereum (ETH-USD) tends to move more than Bitcoin. That was the case on Tuesday morning, with ETH gaining just under 1% in the trailing 24 hours. Over the past seven days, ETH returned stakeholders 5%, a clear outperformance compared to Bitcoin. Still, many similarities exist.
Most notably from a technical perspective, ETH stands in overbought territory. That has largely been the case since the Oct. 23 session, with some brief dips earlier this month providing marginal respite. At the moment, ETH pings as 72.02 on the RSI. In many ways, that’s still a positive sign. However, investors should also realize that as the price action increased, volume levels decreased.
Generally, you’d like to see volume confirm price, which isn’t happening. Interestingly, though, TipRanks analysis on Ethereum currently rates the crypto as “mostly bullish.” But before you jump on this trade, do note that for large transactions and net network growth, ETH pings bearish stats, just like Bitcoin.
With only 68% of Ethereum holders in the money (ITM) as opposed to Bitcoin’s 78%, I think there may be a higher risk of panic selling with ETH.
Cryptos to Watch: Tether (USDT-USD)
For those new to cryptos to watch, Tether (USDT-USD) might seem an almost irrelevant player in the blockchain ecosystem. After all, as a stablecoin, USDT does not rise fluctuate in value in the traditional sense. Rather, it’s pegged on a one-to-one ratio with the dollar. To be sure, the peg itself can ebb and flow and that could clue us in regarding broader sentiment.
Because virtual currency advocates store their wealth in stablecoins like Tether, USDT dynamics give us an indication regarding sector confidence. If investors are bullish regarding the prospects of decentralized digital assets, demand for USDT may rise. Subsequently, one USDT unit could be worth more than one dollar. On the other hand, fading sentiment or increased skepticism could lead to Tether losing value to the greenback.
Currently, the peg stands exactly at 1:1, seemingly broadcasting neutral sentiment. However, TipRanks blockchain analysis states that sentiment is actually “mostly bearish.” Specifically, large transactions only account for 0.34% of Tether’s activity, which is low.
While there’s no need to panic here, it’s something to keep in mind. If you’re interesting in making big trades in cryptos, you might want to average in your exposure.
One of the biggest beneficiaries of the “Uptober” surge in cryptos has been XRP (XRP-USD). The brainchild of Ripple Labs, XRP initially drew controversy because it wasn’t truly a decentralized asset. Nevertheless, cryptocurrency advocates set aside their granular quibbles when the U.S. Securities and Exchange Commission (SEC) accused Ripple of violating securities laws.
However, since achieving a critical legal victory, XRP soared earlier this year. Unfortunately, the SEC fought back, leading to a severe reduction in market value. Yet recently, a slew of positive news has XRP moving back up again. It’s a seesaw ride that you must prepare for if you want to participate in cryptos.
Enticingly, speculation has spiked that Ripple might launch an initial public offering (IPO). If so, the development could not only legitimize XRP but also help other blockchain assets. As well, retail investors that don’t want to bet on individual virtual currencies directly can enjoy an indirect opportunity.
In the meantime, XRP stands in overbought territory, with an RSI reading of nearly 78. Thus, a little patience may be prudent.
After symbolizing the whipping boy of major cryptos, Cardano (ADA-USD) benefited handsomely from the late-October surge in the blockchain. That has continued across the most recent sessions. In the trailing 24 hours, ADA gained 3% of market value. In the trailing seven days, it swung up almost 18%. However, it’s probably a great time now to consider taking a breather.
For one thing, ADA stands clearly in overbought territory. Right now, its RSI is just a bit above 78. Further, it’s traded in the overbought zone since the Oct. 23 session. Another problem to monitor is a possible technical resistance line at 36 cents. ADA attempted to breach this line decisively in July this year but to no avail. Thus, repeated failures might attract the bears.
Speaking of which, TipRanks’ analysis points to ADA being “mostly bearish.” As with other cryptos, the metrics for net network growth and large transactions sit below historical norms. Notably, new Cardano address growth only came in at 0.18%, which is surprising given the robust rally.
Considering that other virtual currencies are overheated, waiting a bit might be the smart thing to do.
An alternative crypto or altcoin that’s rapidly gaining prominence within the blockchain ecosystem, Toncoin (TON-USD) deserves closer examination. In the trailing 24 hours, TON gained almost 6% of market value. In the past one-week period, it soared 15%. Presently, it features a market cap of $8.35 billion, standing just outside the top 10 most valuable cryptos.
Still, it wouldn’t be surprising to see Toncoin promote itself to the list and then some. Utilizing an ultra-efficient proof-of-stake (PoS) consensus model, Toncoin benefits from the power of network scalability and reliability. Further, the underlying blockchain platform provides its customers with fast, transparent and secure payment services. It’s easily one of the top cryptos to put on your watch list.
Now, as with other decentralized assets, TON is overheated relative to prior price action. Currently, it features an RSI of 69.3, which is just under the delineation separating overvalued from fairly valued. However, TipRanks’ analysis points to “neutral” sentiment for Toncoin.
While large transactions have diminished considerably, net network growth has jumped. You still might want to wait a bit but it’s also a crypto to monitor.
While Dogecoin (DOGE-USD) may have started off as a joke, its most ardent supporters take the project very seriously. To be sure, prior price action – particularly from mid-August through early October of this year – caused much consternation. It appeared that the end was finally near for the meme coin. However, an Uptober rally completely changed the narrative, at least for now.
Presently, DOGE trades hands at 7.5 cents. In the past 24 hours, it gained almost 6% of market value. In the trailing seven days, it jumped 9%. However, as is the case with many other cryptos, DOGE may suffer a corrective action. That’s because with an RSI of 71.1, it’s considered overbought. Further, the 7.5-cent level represents an important long-term support and resistance line.
After a failure to secure this milestone, the bears might be sniffing for some downside. Interestingly, TipRanks suggests that sentiment overall for DOGE is “mostly neutral.” Some technical indicators point to upside potential. However, both large transactions and net network growth (which only landed at 0.13%) are low compared to historical norms.
Again, investors may want to wait out the market before making a big move.
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.