Investors are wary of the bitcoin industry because banks have failed before and the Federal Deposit Insurance Corporation (FDIC) took over. One of the banks that the FDIC took over, Signature Bank, got about 30% of its deposits from the virtual currency industry. This shows that the industry is too dependent on cryptocurrencies.
Yet, some investors see the failure of banks as a flaw in centralised monetary systems, hence generating chances for decentralized digital currencies. However, investors must approach with caution, realizing that no asset class can ignore wider economic trends. In light of this, this article covers the most important cryptocurrencies to monitor and what investors should know about them.
Bitcoin (BTC-USD)
The value of Bitcoin, the most popular cryptocurrency, has recently increased. But, investors are afraid that the failure of Silicon Valley Bank (SVB) and Signature Bank, with 30% of Signature Bank’s deposits originating from the virtual currency business, might set off a chain reaction. Some investors feel that the time has come to give decentralization a chance, since this may be the moment for which Bitcoin was designed. It is important to note, however, that the absence of a failing system does not ensure success. Before investing, investors should be careful and consider the possible hazards.
USD Coin (USDC-USD)
Stablecoins, such as USD Coin, are essential for transactions involving digital assets. The ability for investors to transfer their fiat cash into virtual currency enables quick trading. Nonetheless, the paper underlying these stablecoins rests in centralized institutions, which investors find unsettling. USD Coin lost its peg to the U.S. dollar when it was revealed that Circle Internet Finance manages the underlying stablecoin and has $3.3 billion invested in SVB. This reveals that stablecoins are not as stable as their name implies. Before investing, investors must be careful and consider the possible hazards.
Ethereum (ETH-USD)
The value of Ethereum, the second most popular cryptocurrency, has also increased. Yet, investors are anxious about President Joe Biden’s pledges that authorities would step in to protect SVB and Signature clients’ money. The Federal Reserve expanded its balance sheet and implemented targeted monetary accommodation, an inflationary step that might ultimately undermine the economy. Ethereum must decisively surpass $2,000 for further gains to be possible. Before investing, investors must be careful and consider the possible hazards.
XRP (XRP-USD)
Over the past week, the cryptocurrency market has been very unstable, with some coins making big gains and others having trouble getting going. One such crypto that has disappointed investors is XRP (XRP-USD). Ripple Labs, the creator of XRP, has been embroiled in a legal battle with the Securities and Exchange Commission (SEC) over whether XRP should be treated as a security.
Additionally, Ripple recently revealed that it had exposure to the failed financial firm Silicon Valley Bank, which has caused concerns among investors. XRP currently trades below its 50- and 200-day moving averages and must reclaim the 50-cent level to regain upside confidence.
Solana (SOL-USD)
Solana (SOL-USD) has also struggled to make net forward progress, trading at around $20.45 and below its 50- and 200-day moving averages. It is down almost 2% in the trailing week and has struggled to get past the $25 resistance line. Unless there is a significant bullish movement, getting to $30 will be a difficult task for Solana.
Cardano (ADA-USD)
Another cryptocurrency that has not lived up to expectations is Cardano (ADA-USD). Although it has seen a 3% gain over the past week, it remains below its 50- and 200-day moving averages and the former support line turned resistance of 40 cents. Cardano must clear this hurdle and establish a strong presence at 50 cents to gain credibility and upside momentum.
Litecoin (LTC-USD)
Litecoin (LTC-USD), the original alternative cryptocurrency, has incurred a worrying chart pattern. It suffered badly during the trailing week, shedding nearly 8% of its market value. It sits sandwiched between its 50- and 200-day moving averages, with the lack of impetus to drive higher causing major concerns among investors.
Keep Your Eyes Peeled as Fed Decision Nears!
Investors are worried about the effect of previous bank failures and the FDIC’s following takeover on the cryptocurrency industry. Despite the fact that some investors think this is an opportunity for decentralized digital currencies, they must examine the possible hazards before investing.
Bitcoin, Ethereum, and stablecoins like USD Coin are essential to the digital asset market, but investors must know that no asset class can ignore wider economic changes. By considering possible risks, investors are able to make educated choices and prevent potential losses.
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