According to a recent op-ed from Bloomberg, it’s been a happy holiday for cryptos to watch and their loyal advocates. In particular, the benchmark virtual currency soared this year, a dynamic that many in the mainstream did not see coming. Per author Brooke Sample, the optimism largely centers on the flexibility of financial technology (fintech) platforms.
That’s a valid point and one that helps open access to cryptos to watch across the world. However, what may be the pivotal catalyst for the blockchain ecosystem is demographic realities. Back during the 1980s and 1990s, many baby boomers bolstered their wealth through the equities market because that was when they entered their prime earning years.
By logical deduction, the same catalyst could materialize but for cryptos to watch. Millennials have certainly expanded their earning power. And many of the oldest members of Generation Z have entered the workforce. More than likely, they’re going to invest in what they know and love.
That’s cryptos, my friends. Subsequently, the virtual currency sector could see significant gains in 2024, warranting a closer examination of the below digital assets.
Bitcoin (BTC-USD)
What it is: Launched in 2009, Bitcoin (BTC-USD) is the original digital currency. Fundamentally, the underlying peer-to-peer technology facilitated instant payments. Not only that, the mechanism forwarded “trustless” transactions or exchanges of wealth that required no centralized intermediary.
Relevance: Over the past few months, anticipation has built regarding a spot Bitcoin exchange-traded fund (ETF). Intriguingly, the U.S. Securities and Exchange Commission (SEC) set forth a deadline of Dec. 29 for ETF applications to finalize their filings, according to a Cointelegraph article. Another potential catalyst for BTC is a halving event expected in April 2024. Basically, the event will reduce miners’ rewards for validating blockchain transactions, thus better ensuring BTC’s scarcity.
Pros: Currently, BTC enjoys a strong technical posture, with the price noticeably above its 50-day moving average. Also, the nearer-term average runs well above the 200 DMA (which sits at around $31,500).
Cons: Since October, acquisition volume of BTC has been slipping, which is not what you want to see. Instead, you’d like rising volume to confirm a rally.
Ethereum (ETH-USD)
What it is: Billed as an alternative peer-to-peer network, Ethereum (ETH-USD) enables the transfer of digital assets directly with other people. Put another way, we’re talking about trustless transactions. More importantly, Ethereum forwarded the concept of smart contracts, or the ability to coordinate and make agreements via trustless platforms.
Relevance: As with Bitcoin, much anticipation exists regarding a possible spot Ethereum ETF. However, according to another Cointelegraph article, the US SEC is pushing back its decision on several ETH funds to May of next year. That’s not exactly surprising that presumably, Bitcoin will be the first of the cryptos to watch to enjoy a spot ETF. With the complexities involved with the underlying smart contract mechanism – not to mention the proof-of-stake protocol – an Ethereum fund brings additional complexities.
Pros: ETH presents a solid technical profile, though it’s choppier compared to BTC. Notably, Ethereum continues to run above its 50 DMA, which is well above the 200 DMA.
Cons: A common concern among many cryptos to watch is, acquisition volume has been fading, in this case since November.
Tether (USDT-USD)
What it is: A stablecoin, Tether (USDT-USD) operates under a different “ethos” than most other cryptos to watch. Because Tether is pegged on a one-to-one basis with the dollar, the point here isn’t about extracting capital gains. Rather, by storing wealth in the blockchain medium, crypto investors can respond immediately to new opportunities.
Relevance: Let’s face it – with cryptos, people are interested in attaining massive wealth in the shortest time possible. Achieving a peg to the dollar doesn’t exactly sound like a path to riches. However, one can extract significant insights into the blockchain ecosystem by assessing the value of the peg relative to the greenback. Notably, in the trailing one-week period (through early Tuesday morning), USDT has spent most of its time above the 1:1 ratio.
Pros: The above trading dynamic for USDT suggests greater relative demand for cryptos than fiat currencies. That should be a positive for digital assets.
Cons: Analytics from TipRanks suggests neutral sentiment for USDT, suggesting that investors should be cautious about “over-interpreting” the matter.
Solana (SOL-USD)
What it is: An alternative smart contract specialist, Solana (SOL-USD) features a blockchain platform designed to host decentralized, scalable applications, per Investopedia. Per the official website, thousands of nodes operating independently validate transactions within the Solana network. Further, the SOL ecosystem attracts blockchain developers for its low costs.
Relevance: It’s probably no hyperbole to state that Solana has quickly become the most impressive digital asset among major cryptos. Earlier, SOL languished under technical selling pressure. However, that narrative changed dramatically during the so-called “Uptober” cycle. It has rarely looked back since then. Remarkably, SOL gained 51% of market value in the trailing seven days. That makes it the fourth-most valuable virtual currency with a market capitalization of $49.3 billion.
Pros: Technically, SOL may have breached a critical milestone. Now that newcomers recognize the profitability power of cryptos, sentiment should remain robust.
Cons: After skyrocketing, some profit-taking may occur. Therefore, investors just arriving may want to adopt a cautionary approach.
XRP (XRP-USD)
What it is: Developed by Ripple Labs, XRP (XRP-USD) is a cryptocurrency designed to facilitate quick transactions as well as microtransactions. Initially, XRP garnered some notoriety because critics claimed it wasn’t a purely decentralized asset. However, those criticisms faded when the SEC launched its suit against Ripple. Then, it became a fight for legitimacy of decentralized assets.
Relevance: Naturally, XRP became a rallying cry for blockchain advocates following the SEC’s accusation that it was a security, not a cryptocurrency. Subsequently, a favorable federal ruling saw XRP skyrocket in July. Nevertheless, the value of the asset began falling quickly as the regulatory body continued to fight back. Arguably, that could have been the end. However, XRP has been marching steadily higher thanks to investors’ resolute support.
Pros: While XRP has occasionally dipped below its 50 DMA, the overall trajectory appears positive. Also, the price action has stood consistently above the 200 DMA.
Cons: As with many other cryptos, XRP’s acquisition volume has faded since November.
Polkadot (DOT-USD)
What it is: An exciting blockchain initiative, Polkadot (DOT-USD) is a protocol that connects various decentralized networks. This capability allows value and data to be transmitted across previously incompatible networks. Given the significant relevance, Polkadot is known as one of the Ethereum killers. Effectively, the network enhances the possibilities of decentralized technologies.
Relevance: With young people investing heavily in cryptos, Polkadot offers an attractive psychological advantage. Fundamentally, the underlying network distinguishes itself via its connectivity attributes. From a market perspective, DOT currently trades hands at around $9. On a per-unit basis, it’s cheap enough for young investors to acquire a significant amount. At the same time, it’s not too cheap that it becomes ridiculous.
Pros: Obviously, one of the immediate pros is its stratospheric run. In the trailing seven days, DOT gained nearly 31% of market value. Also, the rally has been accompanied by a conspicuous rise in acquisition volume.
Cons: Having jumped so far, so quickly, concerns exist about holding the bag.
Avalanche (AVAX-USD)
What it is: Another candidate among Ethereum killers, Avalanche (AVAX-USD) prioritizes scalability and transaction-processing speed, per Investopedia. Like some of the other alternative cryptos or altcoins, AVAX has been on the run since the Uptober cycle. At one point in October, AVAX was trading hands below $9. Now, it’s trading near $46.
Relevance: What makes Avalanche a relevant player among virtual currencies is the very real possibility of rivaling Ethereum. In recent years, blockchain advocates have discussed the prospects of the flippening, a theoretical event where Ethereum overtakes Bitcoin as the biggest cryptocurrency. However, if we’re diving into the theoretical, the dramatic mobility of altcoins suggests that ETH alternatives like Avalanche could eventually slide into the number-two slot.
Pros: It’s pretty clear that AVAX has garnered the support of retail investors given its stratospheric rise. With more young people participating in cryptos, AVAX could be a viable long-term investment.
Cons: Technical indicators suggest that Avalanche is extremely overbought so caution is necessary.
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.
