The cryptocurrency market is facing another wave of selling pressure, as major coins are losing value across the board. Bitcoin, the largest and most influential crypto asset, has dropped by 4.5% in the last 24 hours, trading below $40,000 at the time of writing.
Ethereum, the second-largest crypto by market cap and the leading platform for smart contracts and decentralized applications, has fallen by 6.5%, slipping below $2,200. Solana, one of the fastest-growing and most promising crypto projects, has suffered the most, plunging by 9% and losing its spot as the fourth-largest crypto by market cap.
What is behind this crypto bloodbath? There are several factors that are contributing to the bearish sentiment in the market. One of them is the ongoing regulatory uncertainty and crackdown in various countries, especially China, where authorities have banned all crypto-related activities and transactions.
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Another factor is the rising inflation and interest rates in the US and other developed economies, which are reducing the appeal of crypto as a hedge against fiat currency devaluation. A third factor is the technical weakness and lack of momentum in the crypto market, as many coins are struggling to break above key resistance levels and attract new buyers.
How long will this downtrend last? It is hard to predict the future of such a volatile and unpredictable market, but some analysts and experts are optimistic that this is just a temporary correction and not a reversal of the long-term bullish trend.
They point out that crypto adoption and innovation are still growing at a rapid pace, and that many institutional and retail investors are still interested in crypto as an alternative asset class. They also argue that crypto has proven its resilience and strength in the past, bouncing back from bigger crashes and reaching new highs.
What should crypto investors do in this situation? There is no one-size-fits-all answer to this question, as different investors have different risk appetites, time horizons, and goals. However, some general advice that applies to most crypto investors is to avoid panic selling, diversify their portfolio, do their own research, and follow a long-term strategy. Crypto investing is not for the faint-hearted, but for those who believe in the potential and value of this revolutionary technology.
However, the opposite seems to have happened, as Bitcoin has lost more than 20% of its value since the ETF launch on January 18.
What are the possible reasons behind this paradoxical phenomenon? Here are some of the factors that may be contributing to the crypto price slump:
Regulatory uncertainty: The spot ETF approval was seen as a major milestone for the crypto industry, but it also raised some regulatory concerns. The Securities and Exchange Commission (SEC) has warned that the ETF may pose significant risks to investors, such as market manipulation, fraud, theft, and cyberattacks.
The SEC has also indicated that it may impose stricter rules on the crypto market in the future, such as requiring more disclosures, oversight, and compliance from crypto firms and platforms. These regulatory uncertainties may have dampened the enthusiasm of some investors and traders, who may prefer to wait and see how the situation unfolds before entering or increasing their exposure to the crypto market.
Market sentiment: Another factor that may be influencing the crypto price is the overall market sentiment, which is affected by various events and news. For example, the recent escalation of tensions between Russia and Ukraine, which could potentially lead to a military conflict, has increased the demand for safe-haven assets such as gold and US dollars, while reducing the appetite for riskier assets such as crypto.
Profit-taking: A third factor that may be driving the crypto price down is profit-taking by some investors and traders who have made substantial gains from the previous bull run. The crypto market has seen a remarkable rally in 2021, with Bitcoin reaching an all-time high of over $69,000 in November and many other cryptocurrencies achieving record-breaking prices as well.
Some of these investors and traders may have decided to cash out their profits or rebalance their portfolios after the spot ETF approval, which was widely anticipated and priced in by the market. This may have triggered a domino effect of selling pressure, as more investors and traders followed suit or reacted to the falling prices.
These are some of the possible explanations for why the crypto price is plummeting even after spot ETF approval. However, it is important to note that these are not definitive or conclusive answers, as the crypto market is complex and dynamic, and influenced by many other factors that are not easy to measure or predict. Therefore, investors and traders should always do their own research and analysis before making any decisions regarding their crypto investments.