TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

This week, the crypto crush continued. What began as a small crack in crypto has opened up into a full-blown wound. Now traders are looking at when the healing can begin. Comments from Tesla (TSLA) CEO Elon Musk sparked the shakiness in Bitcoin prices and related cryptocurrency stocks. Earlier this quarter, Musk explained that Tesla would stop taking Bitcoin as payment due to the environmental impact the mining of Bitcoin presents. Then over the weekend, Musk continued adding fuel to this dumpster fire suggesting that Tesla had sold out of its bitcoin holdings. While Musk ultimately refuted this, the damage had already been done. This week China took the baton pushing the crypto market lower thanks to comments from the government saying that financial institutions won't be allowed to deal directly or indirectly in cryptocurrencies. 

Why Is Crypto Crashing? 

The People's Bank of China said that virtual currency “is not a real currency” and “should not and cannot be used as currency in the market.” This, in itself, suggested that China was aiming to limit institutional activity in cryptocurrencies. The Bank also referenced the latest jump in crypto prices was due to "speculation," which is all too reminiscent of the 2018 crackdown on ICOs. While that ultimately lead to a complete breakdown of cryptocurrencies a few years ago, will this latest move by the PBoC result in the same?

While that works itself out, the price of Bitcoin, Ethereum, and other major cryptos has dramatically recovered throughout the day on Wednesday. Bitcoin tested lows around $30,000. This is a level that hadn't been seen since February. Meanwhile, ETH price broke below $1,800 at one point. Heading into the afternoon session, most crypto in the news has bounced significantly.

The volatility in this higher-risk asset class has also shed some light on other high-risk niches. Penny stocks and small caps are among these other sympathy markets. Taking a look at the Russell 2000 Small-Cap ETF (IWM) and the S&P Small-Cap ETF (IJR), you'll see that both gapped down hard on Wednesday. Both are now trading much lower than their 50-day moving averages. The IJR, however, is still maintaining trading levels above its 100 day moving average, which sits shy of $106. Similar to the crypto market, small-caps sharply bounced back during the Wednesday session. So this begs the question, "Is it time to buy the f*cking dip," or is more pain in the cards right now?

Trending Penny Stocks To Watch Right Now

Given the backdrop of volatility, deciding when to jump back into the market is at the top of many traders' minds. Should you buy penny stocks "at the bottom," or is this rebound just a break in a potentially longer-term downtrend? I'm going to take a closer look at a few of these cheaper names which have bounced back (for now).

Onconova Therapeutics Inc. (ONTX)

Shares of ONTX stock made a nice move this week. Following a continued slide earlier this month, the penny stock rebounded sharply. Speculation began brewing after the company explained it would be delivering results for the quarter. Upon the actual release of the information, shares of ONTX stock jumped big and haven't slowed down yet. The figures weren't as vital to the market as what the company's outlook was on current and future pipeline developments:

"We are off to a strong start in 2021 and remain focused on advancing our clinical programs, in particular with our lead product candidate ON 123300, a multi-kinase inhibitor that potently targets CDK 4 and 6, which are overexpressed in several cancers, including HR+ HER 2- metastatic breast cancer, a potential blockbuster commercial opportunity...We are delighted that our partner in China, HanX Biopharmaceuticals, is expected to begin the third cohort of their Phase 1 study at 120 mg per dose and that ON 123300 appears to be well tolerated with no dose-limiting toxicities observed to date. Notably, the HanX study is dosing patients on days 1 to 21 of 28-day cycles, while the  U.S.  Phase 1 study will be investigating a continuous daily dosing regimen. Collectively, we expect these complementary studies to generate important safety data that will inform the design of subsequent trials and potentially provide preliminary signals of efficacy in patients with advanced cancer," said Steven M. Fruchtman, M.D., President and Chief Executive Officer of Onconova.

Aerpio Pharmaceuticals Inc. (ARPO)

Another one of the penny stocks that are ticking higher this week is Aerpio Pharmaceuticals (ARPO). The company has been on the radar of retail traders ever since announcing a proposed merger with Aadi Bioscience. Following the proposed merger, the new entity will operate under the Aadi Bioscience moniker and focus on advancing Aadi's lead product candidate, Fyarrotm. The merger agreement has been approved by the boards of directors of both companies and is expected to close by next quarter. The company has also gained attention for its exposure to the COVID-19 pandemic.

Recent data from its razuprotafib showed that it could help against blood vessel dysfunction in COVID patients. An abstract that was recently published showed the details of this treatment. In particular, "Pharmacologic activation of Tie2 with the small molecule AKB-9778 reversed the prothrombotic state induced by COVID-19 plasma in primary endothelial cells...Moreover, our findings provide novel rationale for current trials of Tie2 activating therapy with AKB-9778 in severe COVID-19 disease," the abstract reads.

As traders have circulated this information, ARPO shares continue trading higher. With multiple potential catalysts on the horizon, baring any dramatic shifts in trend or unusual outliers, it has remained a stock to watch for the time being. 

Acasti Pharma (ACST)

Sticking with this biotech penny stocks trend, Acasti (ACST) has begun to pop following recent news in the market. This month the company announced that it would acquire Grace Therapeutics for its rare and orphan drug disease programs. The company expects to take control of Grace's clinical-stage assets and an IP portfolio of more than 40 granted and pending patents. Based on the growing body of interest in penny stocks under $1, ACST has come into a brighter light after the update. Furthermore, this week, the company addressed its pricing situation, requesting a hearing before a Nasdaq panel to present a plan of compliance to stay any further action by Nasdaq pending the conclusion of the hearing process. The issue here is that to remain listed on the exchange, a company must maintain a minimum bid price of $1. Due to the current circumstances, ACST stock could be at risk of being delisted should the company remain below $1 and further, not remedy the situation. 

The company expressed that, if necessary, a share consolidation may be advisable. This is just another way of saying reverse stock split wherein a company decreases the number of shares outstanding and, in turn, the face value of the stock increases. According to Acasti, "Should the Company determine that a share consolidation is necessary or otherwise advisable, the Company would likely take such action concurrent with the completion of its proposed acquisition of Grace." So as this story continues unfolding, it would appear that retail traders have become a bit more bullish heading into the second half of the week. Whether or not that will continue is obviously something to monitor closely if ACST stock is on your watch list right now.