What happened
It's been another bearish day in the cryptocurrency markets, with the aggregate value of this asset class declining 3.7% over the past 24 hours, at 1:45 p.m. ET. However, investors are clearly putting more pressure on key tokens today, with Chainlink (LINK +0.64%), Cronos (CRO +1.32%), and Theta Token (THETA +2.90%) all seeing outsize moves to the downside. These tokens are currently down 4.7%, 5.3%, and 8.1%, respectively, over the same time frame.
CRYPTO: LINK
Key Data Points
CRYPTO: CRO
Key Data Points
CRYPTO: THETA
Key Data Points
What's interesting about this move in the crypto sector today is its divergent nature to what's being seen in the stock market. Tech stocks, which cryptocurrencies have become increasingly correlated to, are up significantly over the session, as lower interest rates drive demand for higher-risk assets.
Unfortunately for most cryptos, yesterday's very negative news surrounding the potential collapse of crypto bank Silvergate Capital has provided the latest contagion risk for this beaten-down sector that investors are clearly still pricing in.
These moves are also notable, due to some specific catalysts for these three projects, which are being outright ignored by the market today. Chainlink's Price Feeds have reportedly been integrated into Coinbase Global's new Base blockchain. Cronos had previously seen impressive investor interest as an exchange-related token, for investors looking for recovery plays in the sector. And Theta has seen outsize interest over the past couple of weeks as a result of its partnership to enable collaborative machine learning capabilities.
So what
The fact that these tokens aren't seeing any love again today isn't surprising. Yesterday's news surrounding Silvergate's impressive intra-day decline of more than 50% was enough to spook many investors. Indeed, those bullish on the potential for traditional finance and decentralized finance to work together got a dose of (unfortunate) reality with news that Silvergate may struggle to remain an ongoing concern.
Over the near term, it appears more volatility is likely to remain the norm, with most of the volume likely to be seen by sellers. Now, the question is whether this represents a good buying opportunity for long-term investors seeking more favorable valuations.
Now what
Each of these tokens has been on my watch list recently as a result of their specific growth catalysts. Accordingly, while the macro environment remains weak and sector-specific issues remain, these are three tokens I think could potentially be great buying opportunities at lower levels. I'm going to keep an eye on how these projects perform in the coming weeks and months before suggesting that it's time to get in. Indeed, the headwinds in the crypto sector remain strong right now.
It's unclear what the fallout from the whole Silvergate debacle will be. With so much uncertainty, I don't think now is the time to take an ultra bullish stance on any project right now. However, these are three tokens I think are worth putting on the watch list as they decline in value over the near term.
