Bullish on Blockchain: 7 Cryptos Riding the Fear Trade Wave

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Recently, a Forbes article declared that the Federal Reserve is quietly admitting that gold is replacing the dollar, which could have strong implications for cryptos. While the precious metal may be as far removed from blockchain reward tokens as possible, the two share strong similarities.

Underlining the bullish catalyst for both investment classes is the fear trade. Granted, so-called gold bugs may have a rather apocalyptic view. Nevertheless, at the heart of the argument for both asset categories is the concept that the dollar may not hold sustaining value. Therefore, it’s imperative to diversify away from greenbacks to protect one’s wealth.

Traditionally, investors accomplished this protective stance with gold investments. However, for modern market participants, virtual currencies present a more convenient and easily accessible canvas. Either way, with both gold and digital assets rising on the same fear of dollar devaluation, their long-term narratives may be positive. On that note, below are seven cryptos to watch this week.

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Bitcoin (BTC)

A Bitcoin (BTC) coin surrounded by gold.

Source: Shutterstock

Priced at $69,150 early Tuesday morning, Bitcoin (BTC-USD) managed to pop up a bit more than 1% in the past 24 hours. In the past seven days, BTC gained roughly 2%. Presently, the original blockchain asset’s market capitalization stands at $1.36 trillion. In contrast, all cryptos combined feature a market value of $2.56 trillion, yielding a Bitcoin dominance of around 53%.

On the positive side, BTC managed to respond well to the bearish attack that took the digital asset down to below $60,000 in early May. Further, the ensuing bullishness sees the coin rising above both its 20-day exponential moving average and its 50-day moving average. Bitcoin’s 200 daily moving average (DMA) sits at $54,768, which implies that the long-term uptrend is intact.

On the not-so-pleasant spectrum, acquisition volume has been declining since late February of this year. Ordinarily, investors will want to see rising volume levels confirm the sustainability of a price rally. Since we don’t quite have this dynamic printed out yet, conservative investors are probably waiting on the sidelines.

Still, BTC’s recent bounce up from its 20-day exponential moving average (EMA) suggests near-term optimism. This is one to watch closely.

Ethereum (ETH)

A concept image of a virtual coin based on the Ethereum logo.

Source: Filippo Ronca Cavalcanti / Shutterstock.com

Priced at $3,770 near midnight Tuesday, Ethereum (ETH-USD) wasn’t quite as fortunate as Bitcoin and other cryptos, losing about 1% in the past 24 hours. During the trailing one-week period, ETH suffered a 2% decline in market value. Currently, the number two decentralized digital asset features a market cap of $453.3 billion. The coin represents roughly 18% of virtual currency market share.

Ethereum is in a distinct if not outright unique position. As with other cryptos, ETH suffered a steep decline starting in the late February/early March cycle. However, in the ensuing recovery, Ethereum managed to swing higher on very strong acquisition volume. That’s significant because it indicates that the rally is built on a solid foundation.

However, the not-so-great part is that now that ETH has jumped above the $3,700 level, it’s been somewhat directionless. Ideally, you’d like to see the crypto jump above $3,800 on its way to reclaim $4,000. Unfortunately, the price action from May 21 onward appears pensive.

Without great signals to work on, conservative investors may be waiting for a better read. That could come in the form of higher-than-expected inflation (i.e. devaluation).

Tether (USDT)

Image of four tehter coins

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As a stablecoin, Tether (USDT-USD) is not the most tracked asset in terms of market performance. After all, as one of the cryptos pegged to the dollar, the value should stay stable. However, because the market is a dynamic place — especially so for virtual currencies — a perfect peg is never achieved indefinitely. Instead, USDT fluctuates and it’s these fluctuations that can help guide investors.

Again, because the perfect peg is never achieved indefinitely, it necessarily means that at any moment in time, Tether is one of three things: aligned with the dollar, worth more than the dollar or worth less than the dollar. As a supporter of cryptos, you’d naturally want USDT to be consistently worth more than its peg. This way, the dynamic indicates that people feel comfortable putting their wealth in decentralized form.

However, when the dollar is worth more, this framework suggests the opposite. People are less comfortable with cryptos and would prefer the safety of traditional assets: dividend stocks, government bonds, even just parking funds in cash.

Throughout most of this week, Tether has traded below its peg. It’s just something to acknowledge and watch.

Solana (SOL)

Macro shot of a physical coin from the cryptocurrency Solana (SOL-USD)

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Early Tuesday morning, Solana (SOL-USD) represented one of the top players among the major cryptos. It gained 2.2% in the past 24 hours. However, its trailing seven-day performance was less impressive, only up around 0.2%. Still, SOL at this moment is trading at a respectable $167. This translates to a market cap of $76.7 billion. It represents about 3% of crypto market share.

On the positives, Solana’s bullish narrative mimics that of Bitcoin. From roughly mid-March to the end of April, SOL suffered a severe downtrend. However, on May 1, SOL rocketed higher from an intra-day low of $118.58. At the near-term peak, the cryptocurrency managed to briefly breach the $188 level.

However, on the not-so-encouraging side, a familiar air of skepticism emerges. Since the mid-March session, acquisition volume has conspicuously faded. During the rally that started on May 1, volume levels didn’t really perk up.

Volume levels aren’t everything but traders like to see confirming evidence before making big moves. However, if the dollar devaluation is worse than expected, Solana can fly. That’s why it may pay to keep an eye on gold.

XRP (XRP)

A concept image for the XRP (XRP-USD) token from Ripple.

Source: Shutterstock

At time of writing, XRP reached 52 cents. That puts it up 1% over the past 24 hours. However, during the past seven days, the cryptocurrency fell around 1%. It’s been a disappointing and frustrating series of sessions for XRP holders. Presently, the digital asset carries a market cap of $28.9 billion. XRP commands 1.12% of the broader blockchain ecosystem.

In terms of positive developments, it’s difficult to find much encouragement here. Yes, incurring a double whammy of catastrophic declines on Apr. 12 and Apr. 13, XRP started to march higher. During this period, some bullish speculators were buying up the discount. There are believers here.

On the flipside, XRP was trading hands around 61 cents prior to the aforementioned collapse. That’s the baseline level that the bulls need to achieve. However, as stated earlier, XRP is at 52 cents, down about 15% from its target.

Worse yet, as XRP was trying to build momentum in late May, the bears came in and knocked the wind out of the bulls’ sails. Presently, the asset is having difficulty breaking above its 50 DMA. It’s well below the 200 DMA, which stands at 57 cents. It’s a name to watch unless we see some strong confirming signals.

Dogecoin (DOGE)

Dogecoin Cryptocurrency

Source: Orpheus FX / Shutterstock.com

Early Tuesday morning, Dogecoin (DOGE-USD) traded hands at just under 16 cents. It’s been one of the more volatile cryptos recently. In the past 24 hours, DOGE slipped about 1%. However, during the past seven days, it lost more than 3% of market value. Right now, Dogecoin carries a market cap of a little bit short of $23 billion. It commands 0.89% of the blockchain ecosystem.

For speculators, a mix of positive and negative signals exist that may influence the ultimate decision. On the optimistic end, Dogecoin has responded well to the volatility that began in late March/early April. Specifically, after falling to an intra-day low of 12 cents on May 1, DOGE eventually marched its way to where it stands now.

However, on the pessimistic end, acquisition volume has been conspicuously fading since the end of February this year. Further, it’s a really pronounced erosion, which isn’t that surprising. After all, DOGE is a meme coin and is subject to bouts of emotionally driven trading. That can get old after a while.

Investors may be better served waiting for a strong signal. Thus, they should look to the gold market for clues.

Cardano (ADA)

Cardano (ADA) token with blue and orange digital background.

Source: Stanslavs / Shutterstock

Priced at 45.93 cents, Cardano (ADA-USD) happens to be one of the better-performing assets among major cryptos. In the past 24 hours, ADA gained 2.4%. During the trailing one-week period, it returned a tad more than 1% of market value. Currently, the popular asset features a market cap of $16.4 billion. Relative to all other virtual currencies, Cardano commands 0.6% of the sector.

In terms of overall reception, ADA appears aligned with XRP. Both saw terrible declines in value in the Apr. 12 and Apr. 13 sessions. After a line in the sand was drawn, the bulls attempted to push the price forward, with limited success. Prior to the April meltdown, ADA was trading near 59 cents. That’s the baseline.

On the pessimistic side, Cardano’s 20-day EMA and 50 DMA have consistently imposed upside resistance. That’s angering the bulls because cryptos generally don’t move sideways indefinitely; it’s either shooting to the moon or plunging without a parachute.

As with other decentralized assets, Cardano is also suffering from fading volume. Therefore, it’s probably best to wait for a confirming signal.

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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered 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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