Crypto prices crash on Wednesday due to…
While a number of leading cryptocurrencies have been among the most volatile of all financial instruments over the past number of years, Wednesday has seen a rapid crypto selloff the likes of which haven’t occurred in quite a while.
Most cryptos – led by Bitcoin, Ethereum, Ripple, Litecoin and Bitcoin Cash – are trading down between 20-35% for the day, and that after they have slipped similar amounts already over the past two weeks.
Bitcoin – the most liquid and most traded cryptocurrency – is down 19% as of the time of writing to just below $35,000, although it did dip as low as $29,861 earlier in the day. Ethereum is off 30% to just under $2,400. Just two weeks ago Bitcoin was scraping the $60,000 level, and Ethereum was at $4,100.
The moves in crypto come on a day when equity markets are also selling off hard, with the Dow Jones down 1.6% and the broader S&P 500 index off 1.4%.
So what’s going on?
FNG spoke with Henry Price at institutional crypto brokerage GCEX. He explains,
There are many reasons why a sell-off might be on the cards.
The markets are being shaken by both Elon’s comments, his about the energy efficiency and greenness of bitcoin among others and the announcement by the Chinese government to increase controls on digital assets, but this is anecdotal. However, the sudden drop is not an isolated move. As the Dow, S&P500 and Nasdaq exhibited similar behaviour moving down during the same period.
Bitcoin has certainly been on a huge upward trend, and even these losses bring Ethereum to still above the previous all-time high. Bitcoin and other cryptocurrencies have had a resurgence above even 2017. As a result, investors should be cautious given the volatility and extreme price moves often in the asset class. The fact that Doge, a literal joke coin, is in the top 5 market cap indicated some need for a reality check and correction in the space.