Home Ethereum Why major cryptocurrencies Bitcoin, Ethereum and Dogecoin are collapsing today

Why major cryptocurrencies Bitcoin, Ethereum and Dogecoin are collapsing today

0
Why major cryptocurrencies Bitcoin, Ethereum and Dogecoin are collapsing today
A woman sits with her hands covering her eyes while raising her glasses sitting in front of a computer on a desk in an office.

Image source: Getty Images

This article was originally published on Crazy.com. All figures are in US dollars unless otherwise specified.

What happened

Today’s crypto selloff thwarted much of the positive sentiment we’ve seen materialize in this sector in recent weeks. From 12:30 p.m. ET, top cryptocurrencies Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO:ETH)and Dogecoin (CRYPT: DOGE) fell 5.1%, 9.7% and 6.8% respectively in the past 24 hours.

This drastic shift in sentiment appears to be tied to the dissipation of hype around the upcoming Ethereum merger, which has driven a significant portion of the sector’s gains over the past few weeks.

This development in the crypto market has been reflected in equity markets, which are also down sharply today as investors await the Federal Reserve’s decision on interest rate policy going forward. This week, the Federal Open Market Committee is expected to announce a rate hike of 75 basis points (0.75%), which will take the overnight federal funds rate above 2% for the first time since the pre-pandemic time.

Bitcoin liquidations surged on the news as trading volumes remained very high.

So what

Ethereum has been among the most volatile large-cap tokens on the market in recent weeks. Consequently, its disproportionate decline today must be put into perspective.

After all, this is a token that has grown significantly lately, in anticipation of the upcoming network merge. So on down days like today, it makes sense to see higher selling interest materialize as investors take profits and make short-term gains.

Broader macroeconomic concerns appear to warrant a cautious approach by growth-oriented investors as risky assets are repriced. Some analysts pointed to the potential for stronger growth bear market in stocks as an excuse for investors to avoid high-risk asset classes such as cryptocurrencies. Whether or not such a protracted bear market is in store is still a topic of discussion among investors, leading to outsized volatility as price discovery unfolds.

Now what

The Global Crypto Market Continues to Hover Just a Hair Above the Psychologically Important Trillion Dollars market capitalization level. As a result, crypto investors fear that traders will be incentivized to hit the sell button if we fall back into 12-digit territory. In the coming weeks, greater volatility could become the norm, as investors push and pull at this seemingly critical level.

Additionally, it will be interesting to see how the crypto market reacts to the Fed’s next move this week. Whether this rate hike is greeted with relief or pessimism, it’s something many will be interested to see.

Until this decision, I expect more lapping on the horizon. For long-term investors in these major cryptocurrencies, the next few days and weeks look set to be exciting (for lack of a better word).

This article was originally published on Crazy.com. All figures are in US dollars unless otherwise stated.

LEAVE A REPLY

Please enter your comment!
Please enter your name here