Following the drawdown from the Mt. Gox reimbursements, the drama for the cryptocurrency sector may seem to be over. However, according to CoinDesk, the volatility may only be beginning for cryptos.
Germany, which represents the Eurozone’s biggest economy, still holds 23,800 units of the benchmark blockchain asset. In total, the stash is worth $1.3 billion. However, authorities plan to sell the digital assets, potentially suggesting further turbulence for cryptos.
Near the beginning of 2024, the German Federal Criminal Police Office seized nearly 50,000 units of the benchmark asset from an illegal streaming service. From what’s known about the situation, the authorities will sell the assets for fiat currencies despite offers from high-level investors willing to purchase the virtual currencies to avoid broader market disruption.
As with anything related to cryptos, it’s difficult to pinpoint the future trajectory of the sector. Still, the smart bet is to at least be prepared for a downpouring of red ink. With that, below are virtual currencies to keep on your watchlist.
Bitcoin (BTC-USD)
With the German government about to dump a truckload of Bitcoin (BTC-USD) in the open market, investors need to be especially cautious about their exposure to the benchmark blockchain asset. Per information by CoinMarketCap, BTC did gain more than 3% of market value in the past 24 hours since late Monday night. Unfortunately, in the past week, the crypto suffered a 10% loss.
Of course, what’s most notable about the recent volatility is that Bitcoin fell significantly below the critical $60,000 level. Since late February/early March, 60K has only been breached extensively for a short period of time in early May. Following the brief speedbump, BTC rocketed higher. Therefore, the sudden drop to below this support line is a worrying development.
But could this mean a potential entry point for bullish speculators? There is an argument to be made for such an outlook. However, it’s important to realize that BTC slipped below its 200-day moving average. If it continues to trade below this threshold, it could signal a bearish cycle. Therefore, investors need to be vigilant.
Ethereum (ETH-USD)
Easily one of the most disappointing – and thus worrying – names among cryptos is Ethereum (ETH-USD). In the past 24 hours, the virtual currency swung up more than 6%. In perhaps most other contexts, that would be a major win. Unfortunately, in the past one-week period, ETH suffered a market decline of more than 12%. That has many folks anxious.
Let’s give credit where it’s due. On Monday night, Ethereum managed to eek a price tag just above the critical $3,000 level. However, in prior sessions, this level failed to hold. Thus, the optimists are in a battle for credibility. What makes this problematic is that from an international framework, the July 8 session is done and dusted. And this session’s intraday high failed to break above its 200 DMA.
Indeed, the only session up to the time of writing that saw an intraday high poke above the 200 DMA was the price action of July 5. It goes without saying that Ethereum also finds itself south of the 50 DMA as well as the 20-day exponential moving average.
If credibility isn’t restored soon, there could be trouble ahead.
Tether (USDT-USD)
As a stablecoin, Tether (USDT-USD) is unlike most other cryptos. It mainly functions as a sort of liquidity vehicle; that is, it’s the grease that keeps the gears of the blockchain ecosystem turning smoothly. Pegged on a one-to-one ratio with the dollar, USDT provides a convenient way to store wealth. This convenience enables crypto traders to quickly advantage opportunities as they come up.
However, Tether also provides a secondary role as a barometer of crypto sentiment. While the peg is “set” to 1:1, market forces obviously cause small fluctuations to this pairing. Should investors have more confidence in cryptos, one would naturally expect USDT to feature a relatively higher value than its dollar peg. Conversely, if people are uncomfortable with digital assets, Tether could fall in relative value.
Not surprisingly, earlier this month when severe volatility hit cryptos, USDT suffered a huge hit in value. As the week went on, Tether started to rise. However, for the most part, data from CoinMarketCap appears to suggest that USDT traded below 1:1 with the greenback in the trailing week.
Presently, the stablecoin is still relatively weak. Therefore, it’s best to be cautious.
BNB (BNB-USD)
Those holding the popular cryptocurrency BNB (BNB-USD) – which is associated with the Binance exchange – will likely need to make some hard decisions and right quick. In the past 24 hours, BNB gained just under 6% but that’s really where the good news ends. Over the past seven days, the digital asset suffered a loss nearing 11%.
Frankly, unless some robust bullish action enters the frame soon, BNB could court trouble. The technical charts are quite telling in this regard. On June 18, BNB slipped beneath its 50 DMA. Since then, the asset continued to erode. Feeble efforts to break above the 20-day EMA quickly collapsed earlier this month. At the moment, BNB’s 200 DMA is providing support. That doesn’t look good at all.
The problem is that there doesn’t appear to be much of a support line where BNB currently resides; that is, investor may not have placed enough buy orders around the $500 range. Therefore, it wouldn’t be out of the question for BNB to fall to its next level of logical support. That would be around $300 or so.
Again, it’s just not a good look.
Solana (SOL-USD)
One of the more intriguing cryptos, Solana (SOL-USD) represents the least damaged digital asset among the top 10 virtual currencies by market capitalization. In the trailing 24 hours, it gained over 6%, which is a decent performance. However, what’s perhaps more impressive is that in the trailing week, it lost “only” 6%. Yes, that’s steep but not as much as the others.
Granted, that seems like a backhanded compliment. However, it’s important to note that SOL’s technical support line at $130 has held strong. On July 4, the bears attempted to drive the price below this threshold and they succeeded temporarily. However, the victory was short-lived as the next few sessions helped bring the price back above water. Currently, SOL trades at over $139 per unit.
To be fair, Solana doesn’t have the most robust appearance. At the moment, the blockchain asset is trading noticeably beneath its 50 DMA, which stands around $153. Also, its 20-day EMA is a bit higher than the current market value.
Still, SOL is above (albeit barely) its 200 DMA. That’s very significant, suggesting a possible opportunity in Solana.
Algorand (ALGO-USD)
Despite the massive pressures against cryptos, the popular market adage comes to mind: be greedy when others are fearful and fearful when others are greedy. To be clear, the adage doesn’t apply to every asset. However, if you believe in Algorand (ALGO-USD), the speculative posture perhaps makes sense.
In the past 24 hours, ALGO gained almost 7%, which is a solid performance, all things considered. Unfortunately, in the trailing week, the token lost roughly 9% of market value. However, what makes ALGO enticing is that it has already been heavily “de-risked,” if you will. At the start of the year, ALGO traded hands around 24 cents.
At this year’s peak, ALGO reached a price of approximately 32 cents. So, at 13.5 cents at time of writing, that’s a significant discount. Further, the 14-cent price range represents both long-term support and resistance. Should Algorand break above this threshold, the bulls could come storming in.
Of course, the risk is that the bears will attempt to take one more chomp of the valuation. If that happens, a possibility exists that ALGO could drop to 10 cents before staging another recovery attempt.
Decentraland (MANA-USD)
Another high-risk, high-reward idea among cryptos to consider is Decentraland (MANA-USD). Fundamentally aligned with the metaverse, Decentraland bills itself as the first such decentralized ecosystem that’s built, governed and owned by its users. Thanks to its rather distinct profile, it’s possible that MANA could disassociate itself from Bitcoin’s price action.
If so, that would give Decentraland a critical advantage over other cryptos. Essentially, blockchain assets tend to play follow the leader: wherever Bitcoin goes, so too does the rest of the market. Well, that’s not a great thing right now because BTC looks vulnerable.
On a technical level, what makes MANA stand out is the de-risking concept. At the start of the year, the token traded hands around 54 cents. Right now, it exchanges for less than 31 cents. That’s a significant discount. More importantly, the 30-cent level represents long-term support, a line that has yet to fold under pressure since 2021.
Obviously, that provides confidence for prospective investors. However, the big risk factor is that if this level breaks down, it’s a long way down to the next logical support line, which is around 8 cents.
On the date of publication, Josh Enomoto held a LONG position in BTC, ETH and USDT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
