Why Cryptocurrencies Are Down Big Today

Why Cryptocurrencies Are Down Big Today

What happened

In another volatile day, cryptocurrencies dropped rapidly on Tuesday, more than reversing Monday’s gains. In the last 24 hours, Bitcoin (CRYPTO:BTC) has fallen 3%, Ethereum (CRYPTO:ETH) is down 5%, and Dogecoin (CRYPTO:DOGE) has dropped 7.6%. Momentum also appears to be pushing these cryptocurrencies lower, so the fall may not be over yet.

As usual, regular volatility is likely the biggest driver with cryptocurrencies simply selling off as investors take profits. But there are some fundamental concerns that investors are likely worried about as well.

So what

I think the biggest concern is hackers stealing hundreds of millions of dollars in cryptocurrencies over the last few weeks. The $600 million hack of the Poly Network hit the sector a couple of weeks ago, but those funds have now been returned. It’s a lower-profile $97 million heist last week that investors may just be hearing about. Theives have reportedly already “cleaned” $20 million in cryptocurrencies that may not be recovered and it’s possible most of the stolen cryptocurrency is gone. If hacking risk grows, it could be terrible for cryptocurrencies long-term.

The regulatory front is full of risks as well. SEC chair Gary Gensler has said he is in favor of rules that protect investors and consumers without completely killing cryptocurrencies. And for now that means treating them as securities, just like any stock or bond. That comes with a double-edged sword: On one hand, it signals legitimacy that could increase the adoption of cryptocurrencies; on the other hand, it could mean broad tax consequences for traders and investors. And with rules still up in the air, it’s not surprising to see a pullback when cryptocurrencies rise like they did yesterday.

On the trading angle, it’s not unusual for an asset to pull back after a quick increase in price. In the case of each of these cryptocurrencies, you can see that they jumped over 50% in value over the last month, before today’s pullback. Sometimes a correction is just a normal part of investing.

Now what

The battle between cryptocurrency fans and the traditional financial infrastructure continues, and it will be a volatile ride. But I think it’s clear that cryptocurrencies are carving out a niche for themselves, whether that’s as a store of value or a way to pay for goods and services. But there are still unknowns when it comes to how governments around the world will treat cryptocurrencies.

What’s most concerning long-term is the regular hacks that hit cryptocurrency wallets. If investors and consumers can’t trust that their cryptocurrency will be safe they may not adopt it as widely as many hope. And that’s ultimately what will keep cryptocurrency values from growing.

I would chalk today up as another example of volatility in cryptocurrencies, but watch the hacking and regulatory trends for cryptocurrencies because that’s what will likely tell us if this pullback is temporary or the start of a downward trend.

Bitcoin Price Today Drops for 2nd Day; Nears $48,000; Ether Down.Top Cryptocurrency Rates

Bitcoin Price continued to drop for the second straight day on Thursday. The world’s largest crypotcurrency was trading at $48,373, up 0.43 per cent at the time of this article. The cryptocurrency on Monday surged to $50,000, which happened for the first time after the crash that happened in May this year. In April, the world biggest currency Bitcoin surged and hit an all-time high at $65,000. Bitcoin has risen and recovered after hovering in the range of $30,000 to $40,000 for many weeks. Bitcoin steeply fell from $65,000 in April to $28,800 in June, after a massive sell-off in June and July, triggered by Chinese ban on the corporates, financial companies, payment companies, providing services related to cryptocurrency.

This week two announcements made by Paypal and Coinbase pulled up the Bitcoin around $50,000 mark.

According to Zebpay trade desk, Bitcoin has touched the $50,000 mark for the first time since May and has surged almost by 72 per cent from its recent low of $29,301. Technically on the weekly time frame, the asset is trading in an uptrend forming a ‘Higher Highs Higher Lows’ pattern. BTC may face some resistance around $51,109 levels (61.8 per cent Fibonacci Retracement Level) and if these levels are breached with good volumes then we can expect the asset to further rally up to $57,000.

On the other hand, Ether, the rival currency of Bitcoin was trading at $3166 or down 0.86 per cent at the time of this article. It was trading up 5.97 per cent over the last week. The market cap for Ether stood at $375.72 billion. The third spot was occupied by Cardano, which was trading at $2.66, down 3.53 per cent at the time of this article. The Cardano was trading up 26.31 per cent over the last week.

Binance Coin stood at $501.72, up 4.09 per cent over the past 24 hours. The Binance Coin was trading up 26.41 per cent over the last week. The market cap for Binance Coin stood at $85.5 billion.

The total crypto market volume over the last 24 hours is $112.54B, which makes a 5.19 per cent decrease. The total volume in DeFi is currently $15.72B, 13.97 per cent of the total crypto market 24-hour volume. The volume of all stable coins is now $88.73B, which is 78.84 per cent of the total crypto market 24-hour volume, as per the Coinmarketcap.com.

“The cryptocurrency spectrum kept searching for a sturdy support. Bitcoin hovered above the $48,000 level, allowing bears to enter the markets. Despite a minor correction, there is no reason to fret. The bulk of the activity is in the derivatives market as over $1.7 billion worth of contracts will expire in the next two days. Long-term investors should choose to ignore such noise in the crypto markets. Markets would look to find support towards the end of this month," Edul Patel, CEO and co-founder, Mudrex- A Global Crypto Trading Platform said.

Here are the top cryptocurrencies and their prices on August 25, 2021 (data from coinmarketcap.com while publishing the article)

Bitcoin $48,373 or -0.43 per cent change in 24 hours

Ethereum $3,166 or -0.86 per cent change in 24 hours

Cardano $2.66 or -3.53 per cent change in 24 hours

Binance Coin $501.72 or 4.09 per cent change in 24 hours

Tether $1.00 or 0.01 per cent change in 24 hours

XRP $1.14 or -1.79 per cent change in 24 hours

Dogecoin $0.2831 or -3.44 per cent change in 24 hours

USD Coin $1.00 or 0.00 per cent change in last 24 hours

Polkadot $25.28 or -3.69 per cent change in 24 hours

Solana $70.65 or -1.77 per cent change in 24 hours

Uniswap $26.67 or 1.54 per cent change in 24 hours

Terra $28.75 or -6.61 per cent change in 24 hours

Bitcoin Cash $633.09 or -1.82 per cent change in 24 hours

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Cryptocurrency prices today: Bitcoin below $48,000, ether, dogecoin fall. Latest rates here

In cryptocurrencies, Bitcoin prices today plunged as the world’s largest cryptocurrency by market capitalization was trading at 47,252.7, down over 3%. The most popular virtual token broke above $50,000 level earlier this week for the first time since mid-May. Bitcoin is up 63% this year (year-to-date), though, far away from its record just below $65,000 in April.

As per CoinDesk, Ether, the coin linked to ethereum blockchain and the second largest crypto, plunged to $3,129.7, trading with cuts of nearly 3%. Dogecoin, on the other hand, declined 6% to $0.27. Other digital coins like Stellar, Uniswap, XRP, Litecoin, Cardano also plummeted over the past 24 hours.

Meanwhile, cryptocurrency funds saw their first inflows in seven weeks as investors poured money into altcoins such as ether, cardano, and Solana last week, according to a report by digital-asset manager CoinShares.

Digital asset funds saw net inflows of $21 million last week. However, during the six-week period, the longest losing streak since January 2018, digital asset investment products saw total redemption of $115 million.

However, bitcoin saw its seventh straight week of outflows, as investors took out $2.8 million from funds based on the world’s biggest cryptocurrency during last week. Ether saw minor inflows totalling $3.2 million last week along with other altcoins such as cardano, litecoin and polkadot, which saw inflows of $6.4 million, $1.8 million and $1.1 million, respectively.

Before the rebound over the past few weeks, the crypto sector had been weighed down by a crackdown in China and worries over the environmental impact of the energy needed to create coins and process transactions. Later, supportive comments from billionaire Elon Musk and Ark Investment Management LLC’s Cathie Wood had helped the Bitcoin rally.

(With inputs from agencies)

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