5 Cryptocurrencies to Watch in 2023
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It’s been a tumultuous year for crypto investors, who have seen the total crypto market cap fall from around $2.2 trillion in early 2022 to around $850 billion in December. Severe valuation erosion was caused by several high-profile bankruptcies in 2022.
The entire Terra ecosystem imploded with the collapse of its LUNA token and TerraUSD (UST) stablecoin. The failure of Three Arrows Capital followed this black swan event, and the final blow came when FTX went bankrupt and imploded. These consecutive events triggered a liquidity and credit crunch and seem to have done the most damage to the crypto industry.
A sustained bear market tends to test investors’ patience, but presents one of the best opportunities to buy fundamentally sound cryptocurrencies at lower levels. Savvy investors who can go against the herd and invest during periods of panic tend to benefit most when the trend eventually reverses.
Daily crypto market data view. Source: Coin360
While a bear market is a great time to build a portfolio, traders tend to make the mistake of buying the coins that have fallen the most, hoping they will bounce back to their former glory. Most of the time this doesn’t happen because every bull market has a new group of leaders. Generally, those who are resilient during the fall or recover quickly from the bottom lead on the way up.
Let’s look at five cryptocurrencies that show promise for 2023.
BTC/USDT
The broader cryptocurrency market is unlikely to start a new bull phase until Bitcoin (BTC) reverses its trend. Although Bitcoin has been in a strong downtrend for the past few months, the Relative Strength Index (RSI) is forming positive divergence, suggesting that the bearish momentum may be weakening.
BTC/USDT weekly chart. Source: TradingView
However, positive divergence must have favorable price action to confirm a trend reversal.
The first sign of strength will be a break and close above the 20-week exponential moving average (EMA) of $19,870. The BTC/USDT pair could rally to $25,211 where the bears could mount strong defenses again.
If the price turns down from this level and then recovers from the 20-week EMA, it will signal a shift in sentiment from selling on rallies to buying on dips. That could increase the possibility of a break above $25,211.
The pair could then rally to the 50-week simple moving average (SMA) of $28,156. This remains the key level for the bears to defend as a break above it could herald the start of a new uptrend. Bears may face a small hurdle near $32,400 but it is likely to be breached and the pair could rally to $50,000.
However, the downtrend could resume if the price turns down from the current levels or the 20-week EMA and falls below $15,476. The next major support on the downside is $12,500 and $10,000.
BTC/USDT daily chart. Source: TradingView
The pair has been trading below the $17,622 breakdown level for several days, but the bears failed to capitalize on it and resume the downtrend. This suggests that selling is drying up at lower levels.
The 20-day EMA ($17,021) has flattened out and the RSI is near the midpoint, indicating that the bears may lose their footing.
If buyers push the price above overhead resistance, it will signal a possible trend reversal. Confirmation will come after the bulls flip the $17,622 level into support. That could set the stage for a rally to $25,211.
ETH/USDT
Ether (ETH) has been in a strong downtrend, but on a small upside it is finding support near the psychological $1,000 level. The repeated rises to the 20-week EMA ($1,428) also indicate sporadic buying by the bulls.
ETH/USDT weekly chart. Source: TradingView
Despite three rallies over the past few weeks being rejected at the 20-week EMA, the bears have failed to pull the ETH/USDT pair to the June low of $881, suggesting traders are buying the dips.
If bulls push and sustain the price above the 20-week EMA, several bears could cover their short positions. This could result in a rally to the overhead resistance at $2,030. The 50-week SMA ($1,977) is close; Therefore, this level can be a major obstacle for the bulls.
If buyers push the price above $2,030 the pair will complete a double bottom pattern. This reversal setup has a target of $3,200 but the rally could extend to $3,600. The $3,600-$4,000 zone could prove to be a major barrier for the bulls.
If bears want to invalidate this optimistic view, they need to move lower and sustain the price below $881.
ETH/USDT daily chart. Source: TradingView
The pair has been trading inside a descending channel pattern, but with the 20-day EMA ($1,255) flattening out, the RSI is lying near the midpoint. This suggests that buyers are attempting a comeback.
If bulls push the price above the 50-day SMA ($1,326), the pair could rally to the channel’s resistance line. This is the key level to watch out for as a break above it could indicate that the downtrend might end. The pair could then rally to $1,800 and $2,030 thereafter.
On the contrary, if the price turns down from the current level or the overhead resistance, the bears will try to pull the pair to the channel support line.
MATIC/USDT
Several major cryptocurrencies are trading or threatening to fall below their June lows, but Polygon (MATIC) was an outperformer as it attempts to form a base well above its yearly low.
MATIC/USDT weekly chart. Source: TradingView
The MATIC/USDT pair broke above the 50-week SMA ($1.05) a few weeks ago, but the bulls failed to sustain the breakout. This suggests that bears are active at higher levels. An encouraging sign is that the bulls have not allowed the price to break below the crucial support at $0.69.
The 20-week EMA ($0.88) has flattened out and the RSI is near the midpoint, indicating an equilibrium between supply and demand. The first sign of strength will be a break above $1.05. That could increase the likelihood of a retest of $1.30. This is an important level for the bears to defend as a break above it could signal the start of a new uptrend.
The pair could rally to $1.75 where the bears could pose another strong challenge. If this resistance is breached, the pair could gain momentum and climb to $2.92. The bears will prevail if the price sinks below $0.69. That could pave the way for a drop to $0.31.
MATIC/USDT daily chart. Source: TradingView
The pair has been stuck between $1.05 and $0.69 for several days. The breakout above $1.05 on November 4th proved a trap as the bears dragged the price back below $1.05 on November 8th. Since then, the pair have continued their range-bound action.
The longer the price stays within the range, the stronger its breakout. The next break above $1.05 could increase the prospects of a rally above $1.30. If that happens, the bullish momentum could increase and the pair could climb to the psychological $2 level.
Alternatively, a break below $0.69 could tip the advantage in bears’ favor. The pair might drop to $0.40 first and then retest the key $0.31 support.
Related: Bitcoin traders are crossing their fingers hoping a positive Fed meeting will spark a run to $18,000
TON/USDT
Toncoin (TON) has gradually pulled higher from the June low of $0.74. Traders hit a higher low of $1.18 in October, which is a sign of strength.
TON/USDT weekly chart. Source: TradingView
The upward move in the TON/USDT pair has hit the overhead resistance zone between $2.15 and $2.50. The bears will attempt to halt the bulls’ advance in this zone. If they do, the pair could drop to the 20-week EMA ($1.61) and then to $1.18. If this support gives way, the pair could retest its June low of $0.74.
If bulls want to keep their advantage, they need to push their way through the overhead zone. The pair could attract large buying if it sustains above $2.50 as it does not face any major overhead resistance above this level. The next stop on the upside could be $4.26.
TON/USDT daily chart. Source: TradingView
The bulls attempted to push the price above $2.15 on December 11, but the bears held their ground as indicated by the long wick of the daily candle. However, the bulls held their ground and attempted another break of the overhead resistance on December 12th.
The rising moving averages and the RSI in the overbought territory indicate that the path of least resistance is up. Above $2.15, the pair could rally to $2.50.
This level can act as resistance on the way down. But if bulls reverse the $2.15 level into support, it will increase the chances of a break above $2.50.
The bears need to pull the price below the moving averages and sustain it to weaken the short-term strength. The pair could then drop to $1.50 and later to $1.20.
QNT/USDT
Quant (QNT) surged from $40 in June to $228 in October. This sharp rally amid the bear phase indicates strong demand from traders. Although the price has given back much of its gains, buyers are attempting to form a higher low near $87.
QNT/USDT weekly chart. Source: TradingView
After the volatile moves of the past few weeks, the QNT/USDT pair is likely to enter a consolidation phase as bulls and bears battle for supremacy. The broad range limits could be $87 down and $228 up.
A well-defined range offers traders an opportunity to buy near support and book profits near resistance.
If the bulls push the price above $228, the pair could accelerate and rally to $325. This level could act as a roadblock, but if cleared, the pair could retest the $430 high.
If the price turns down and falls below $87, it will indicate that the bears are in charge. The pair could then drop to $50.
QNT/USDT daily chart. Source: TradingView
After the sharp drop from $228 to $94, the pair might remain range bound for some time. The key level to watch on the upside is $137 and $94 on the downside.
If the bulls push the price above $137, the pair could rally to the 61.8% Fibonacci retracement level at $176. The bears are expected to defend this level aggressively as a break above it could complete a 100% retracement which could result in a rally to $228.
However, if the price breaks and stays below $94 in the short-term, it could indicate a resumption of the downtrend.
The views, thoughts, and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain any investment advice or recommendation. Every investment and trading move involves risk and readers should do their own research when making a decision.
