This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
What happened
The weekend started softly for cryptocurrencies. Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) lost ground as the broader crypto market sold off. Bitcoin lost about $2,000 of value per token in a late Friday crash, hitting a low around $46,786, although as of 3:40 p.m. ET on Saturday, the cryptocurrency is up 0.5% over the last 24 hours to $48,632. Ethereum experienced a similar drop late Friday, hitting a low of $3,835 at one point and is currently up 0.3% in the last day to $4,031.
DogeCoin (CRYPTO: DOGE) was down as much as 7.3% over 24 hours and is currently down 0.9%. Polygon (CRYPTO: MATIC) fell as much as 11.8% and Terra’s Luna (CRYPTO: LUNA) coin fell as much as 16.2%, although they’re now down 5.6% and 8.8% respectively.
So what
A crash early in the weekend happened a week ago as well, indicating that bigger traders may pull their liquidity, or trades, early in the weekend. But the market recovered quickly and is now flat for most of the largest cryptocurrencies.
The theme of this week was weakness in cryptocurrencies overall as industry leaders were led before Congress. Some lawmakers expressed concern about the industry’s lack of regulation and crypto executives argued that rules are needed, but not those written for an older financial world. At the end of the day, there were few fireworks and no comprehensive regulation seems to be imminent.
Terra Lab’s Luna coin is the one cryptocurrency that has cratered significantly in the last few hours. Less than a week ago, the coin reached the top ten market caps among cryptocurrencies. But Terra Labs and co-founder and CEO Do Kwon have come under investigation in the U.S. and he doesn’t seem to be interested in complying with regulators. In an interview with CoinDesk.tv, Kwon said U.S. regulation was “not that interesting” and may not be as helpful as other executives in setting rules for the country. Despite the big move, there isn’t any significant news out about this cryptocurrency today.
Now what
It seems that wild moves on very little news have become standard for cryptocurrencies lately. On a macro level, I think investors need to consider what the market’s pullback from growth stocks meant, and how the Federal Reserve’s reduction in asset purchases and potentially higher interest rates mean for the market. Thus far, cryptocurrencies have traded along with growth stocks, indicating they aren’t an effective hedge for inflation or a down market.
We should also keep in mind that many cryptocurrencies have gone up rapidly and even a big pullback may be natural. For example, Luna coin is still up 21% over the past month and Polygon is up 22%. On the flip side, Bitcoin, Ethereum, and DogeCoin are down 25%, 12%, and 35% respectively over the past month.
Volatility continues and long-term investors will want to watch the health of each cryptocurrency’s ecosystem, not just its value from day to day, for an indication of health.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
The post Why cryptocurrencies like Bitcoin, Polygon, and Terra fell today appeared first on The Motley Fool Australia.
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More reading
- Bitcoin, Ethereum, and Cardano continue to recover from late-week selloffs
- Here’s what crypto investors need to know about the metaverse
- Bitcoin (CRYPTO:BTC) sinks again. Who’s going to catch that falling knife?
- Is the RBA about to join the digital currency revolution?
- Why the Bitcoin price declined over the last 24 hours
Travis Hoium owns Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
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