Initially, uncertainty about the long-term impact of the Covid-19 omicron shook global markets, including cryptocurrencies. Early reports indicated that the new strain was more transmissible than the delta variant, which created concerns about potential mitigation measures. Of course, this may entail a burden on the international economy, which will not benefit cryptocurrencies.
Now, however, investors are resting a little easier as health experts weigh in on the available evidence. When discussing the severity of the variant, National Institute of Allergy and Infectious Diseases (NIAID) Director Dr. Anthony Fauci stated, “It is almost certainly no more severe than delta.” Furthermore, Fauci noted that omicron can be less severe. This helps both stocks and cryptocurrencies to regain their composure.
While the recent comeback has been very encouraging – after all, many cryptocurrencies are trading at critical technical thresholds – no one can say for sure whether we’ve bottomed in negative sentiment. Certainly, European stocks seem to be ignoring Omicron’s concerns for now. However, Fauci cautioned against overinterpreting the early data because the populations covered are strongly skewed towards younger demographics who are less likely to be hospitalized.
Just as importantly, investors need to be concerned not only with the health risks here but also about the economic threat that omicron could pose. If global governments fear the alternative, this is a legitimate risk – regardless of the facts. With UK scientists warning of the variable’s high portability, neither stocks nor cryptocurrencies are out of the woods.
Back in the United States, UCLA Anderson’s forecast recently lowered its forecast for employment gains and California job totals for 2022. Personally, I don’t find the reductions in these forecasts worrisome. However, perhaps investors should focus on the government’s response when considering which major cryptocurrencies to buy.
Beyond the uncertainty surrounding Omicron, investors should also consider geopolitical risks. It is clear that US relations with China and Russia – already poor when President Joe Biden took the helm – are escalating in tension. Hopefully cooler heads will prevail. However, it is something to put on your radar before you take too many bets with cryptocurrencies.
Cryptocurrency to watch: Bitcoin (BTC)
There are many developments that have affected the benchmark bitcoin price. Recently, though, there is a hearing between the US House of Representatives Financial Services Committee and six cryptocurrency firms, with many investors sitting on the sidelines. Corporate executives will make the case that tighter restrictions will push cryptocurrencies – and the companies associated with them – away from US borders and into the hands of other countries.
In my opinion, I find this thesis ironic. If cryptocurrencies are a truly decentralized ecosystem, then government restrictions that aren’t a blanket crackdown on internet access really shouldn’t matter. By appealing to the US government, these crypto companies indirectly acknowledge that decentralized economies still depend on the tolerance and approval of central authorities. The whole issue seems to go against the core blockchain ethos.
However, in the early morning hours before the congressional hearing, bitcoin fell again. At the time of writing, BTC is trading at around $50,000. I take this as a sign that investors should remain vigilant – if not to the omicron threat, from other geopolitical and economic risks affecting cryptocurrency today.
Long story short, Bitcoin is playing with fire. Watch the 200-day moving average at around $46,500. Prolonged dips below this level can cause problems.
As crypto proponents know, Ethereum is the backbone of blockchain applications. Check out any number of decentralized projects and opportunities, you will find in the white paper that they are based on the Ethereum protocol. This key feature also gave ETH more stability during bouts of volatility.
The numbers say it all. As I just mentioned, BTC is trading at around $50,000. About a month ago, it was trying to reach the $70,000 level, which is a drop of about 28%. In the case of Ethereum, ETH was up to $5000 but it missed the mark. Currently, hands are trading around $4,400, which is an approximate loss of 12%.
Of course, if you have to lose, 12% sounds a lot better than 28%.
In addition, the Ethereum chart looks more encouraging, with the base currency overlapping the 50-day moving average rather than below it like Bitcoin. Investors still need to be careful. Throughout this year, ETH – and other cryptocurrencies as well – have been largely marked by directional trajectories. These side things put an uneasy profile on Ethereum, so careful money management is justified.
Cryptocurrency to watch: Binance Coin (BNB)
Love it or hate it, Binance Coin has been one of the best performing cryptocurrencies of 2021. On a year-to-date (YTD) basis, BNB is gaining over 1,400% as of the early morning hours of December 8. . Associated with the cryptocurrency exchange of the same name – the largest platform in terms of daily trading volume each CoinMarketCap There is a case to be made that BNB could be one of the safest crypto investments out there.
Now, when configuring anything in the virtual currency space, everything is relative. Sure, “safer” is as relative as you can get. Nothing particularly encouraging about cryptocurrencies if you are, for example, an investor who buys and loves preferred stocks. Investors should be just as careful with BNB as they would with any other risky digital asset.
However, by acquiring BNB, you are indirectly participating in the ticketing component of the cryptocurrency betting industry rather than betting which team will win. Coincidentally, Binance also has a much more powerful blueprint than competing cryptocurrencies.
Meanwhile, if external developments bring down Bitcoin, I am not sure that Binance Coin can hold out. Therefore, conservative investors may want to wait for some news to emerge before placing an order.
Solana is one of the most complex cryptocurrencies to navigate, and it has been on an absolute ripple this year. Even with the recent pullback, be aware that individual coins were selling between $1.50 and $1.60 at the beginning of 2021. With the price at the time of writing above $190, you can easily make your own calculations regarding profitability here.
But now comes the hard part: What do you do with Solana now that you’ve already amassed a massive stream of wealth? Based on how meme coins – or even meme stocks – react after their big boom, the futuristic narrative doesn’t sound very attractive.
The thing that distinguishes Solana is that, basically, it is one of the most useful blockchain initiatives. By promoting the Proof of Date protocol, Solana facilitates greater security in transaction confirmations. Prior to this encryption, the contributors to the blockchain network mined based on the occurrence of the activity and not necessarily on when it occurred. Essentially, the technology underlying SOL lends the blockchain a multidimensional security profile.
But is this important to investors? Recently, SOL fell below the 50-day moving average and extended losses for multiple sessions. As with other cryptocurrencies, I will stay tuned for the news.
Cryptocurrency to watch: Cardano (ADA)
Measured on a year-to-date basis, Cardano continues to be one of the best performers among cryptocurrencies, with a return of over 690%. But increasingly, this is where the good news ends. Against the subsequent half-year period, the ADA is down more than 11%. Even more alarming, compared to the following month, the coin lost about 34%. Unlike other digital assets, there isn’t a whole lot of positive near-term dynamics worth getting excited about.
In the past five days for example, Cardano has given up a significant portion of its market value. Several bullish technical analysts were hoping that the ADA would maintain the $2 support line it established in the late summer. Unfortunately, the currency fell below this key level a day after the mid-November session. Since then, he hasn’t come out of his descending vice grip.
Prior to these events, many proponents were optimistic that its benefit – Cardano is essentially a pioneer in the Proof of Stake protocol – would help boost trading sentiment. That may appear on the table at some point. But for now, the bears are in control.
Contrarians may view this as an opponent, but I will nibble very carefully. With cryptocurrencies flying in a comment pattern, you may want to wait for further confirmation.
One of the biggest concerns about cryptocurrency is regulatory ambiguity. It’s crazy and unfortunately understandable due to the lazy nature of government actions, cryptocurrency related transactions are treated to some extent as securities for tax purposes. But whether they actually be Securities are the core of the lawsuit against the US Securities and Exchange Commission (SEC) against Ripple Labs.
To cut short a very long and complicated story, the SEC alleges that Ripple distributed XRP as a de facto Initial Public Offering (IPO). However, if this is truly an IPO, Ripple will need to go through the same process that any other company wishing to raise capital through the public market would have to undergo.
Of course, Ripple asserts that XRP is a cryptocurrency, citing similarities with Bitcoin – a digital asset that the government has not been concerned about (until now). But how this lawsuit will end is anyone’s guess. However, a theory has emerged that the SEC may face an unfavorable development in its case. This may result in a compromise for both parties. In theory, at that point, XRP would be clear and legal, potentially sending it “to the moon” along with Japanese billionaire Yusaku Maezawa.
With that said, the technical chart looks very ugly. XRP is below the 50 and 200 day moving averages. Anyone who bets on the above theory will take a huge risk.
Cryptocurrency to watch: Polkadot (DOT)
Last up on the list of cryptocurrencies is DOT. If you believe in the technical approach to evaluating the markets, you will find Polkadot great whether or not you want to take part in the opportunity. Currently, the coin is resting on its 200-day moving average, which puts it in a technical danger zone since it is also well below the 50-day moving average.
Honestly, if I were to view this chart as a random arrow separated from any underlying information or context, I would probably end up avoiding the DOT. Even if the coin ends up bouncing higher, I will keep an eye on where the rally might end up. If it ends up at $38, I’d be really worried. This will form a head and shoulders pattern, with the first shoulder forming in September.
What’s really interesting to me is that Polkadot represents a contrast between strong fundamentals and terrible technology. On the utility front, an open-source multi-chain protocol enables blockchain applications to operate at a larger scale and scale. However, the main source of concern with DOT is that investors as a whole don’t seem to care much.
In the end, Polkadot could be the most valuable blockchain network. But unless the market is willing to believe it, the DOT risks a further correction.
Posted in Josh Enomoto Hold a long position in BTC, ETH, ADA and XRP. The opinions expressed in this article are those of the author, and are subject to InvestorPlace.com Posting Guidelines.
Josh Enomoto, former chief business analyst for Sony Electronics, has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has provided unique and critical insights into the investment markets, as well as many other industries including law, construction management, and healthcare .