On the weekend, half a trillion dollars were burned within 24 hours on the crypto market. That was drastic. Other coins were carried away. It almost seems like the market is about to teach its investors a lesson -.
In the meantime, the price of Bitcoin dropped to $ 41,967. A few days ago, the Bitcoin price scratched the $ 60,000 mark, and in mid-November it was at a record high of just under $ 68,500. The situation is similar with ether, the second most important. In the past 24 hours alone, the coin based on the Ethereum blockchain lost more than six percent of its value, but overall last week’s slump was much less severe than that of Bitcoin.
Why are the prices in the crypto market going crazy right now? And does ether get off better than other coins?
The reasons for the share price fall are not very clear; there are various attempts at explanation among analysts and market observers. In principle, the crypto market is not spared from the general uncertainty on the stock exchanges. Concerns about the new Corona variant Omikron have also unsettled Bitcoiners and crypto enthusiasts. Many analysts therefore simply blame profit-taking for the collapse after the price increases in recent months. Especially on weekends, the less liquid markets could cause enormous fluctuations. The uncertainty is not only felt in the crypto markets, tech stocks such as Robinhood have also lost a lot of their value.
The outlook for the coming days is also likely to have worried investors. On Wednesday, some crypto managers will be interviewed in front of the House of Representatives. Among other things, the head of the crypto exchange should be there. Investors fear that the US government under President Biden could regulate crypto currencies much more strictly and thus stifle the price increase in the markets for the time being.
Crypto investors are also worried about the rising inflation figures, and intervention by the US Federal Reserve is becoming more and more likely. This would start a new era for crypto currencies, so to speak: Bitcoin has been around since 2009. Many central banks, including those, have almost exclusively lowered their key interest rates during this time. The Fed, too, has long since left its temporary rate hikes of up to 2.5 percent behind and left the key rate at 0.25 percent as a result of the pandemic. In other words, Bitcoin and other cryptocurrencies must first prove how they can hold their own in an inflationary environment with rising interest rates.
In addition, there are crypto-typical problems: The hack of the Bitmart crypto exchange should not exactly strengthen confidence in the market. According to the exchange, criminals have stolen tokens worth around 150 million dollars, and the actual damage is probably even higher. Binance Coin, Safemoon and Shiba Inu Coins are said to have been among the looted cryptocurrencies. The exchange has meanwhile suspended payments.
Ether doesn’t suffer as much as Bitcoin
What is noticeable: Ether does not suffer as much from the great uncertainty as it does with Bitcoin, the oldest cryptocurrency. One reason for this could be that ether was not traded as a supposed safe haven or a gold substitute in times of inflation. In contrast to Bitcoin, which due to its natural limitation is actually more suitable as a long-term investment – if you can withstand high fluctuations – the technology behind it is more in the foreground when investing in Ether.
More and more business models are based on the Ethereum blockchain, and the number of possible applications is increasing. Because in contrast to the Bitcoin blockchain, Ethereum enables, for example, the sending of so-called smart contracts, i.e. virtual contracts that are exchanged via the. In the future, these are likely to play an important role in more and more business areas, especially in the financial sector.
Accordingly, ethers are already very versatile. For example, most NFTs, i.e. digital unique collectibles, are traded on the Ethereum blockchain and paid for with ether. Due to the wide range of possible uses, ether often fluctuates less than Bitcoin. In addition, the latter is of course still considered to be the driving force behind cryptocoins; Bitcoin is the most established crypto currency, even among small investors. They are also investing increasingly thanks to the Bitcoin ETFs that were only recently approved in the USA. In other words: the more inexperienced investors frolic in the market, the more fluctuations can be expected in turbulent times.
Basically, the outlook for Bitcoin and other crypto currencies is still positive. With the aforementioned index funds (ETFs) the market is opening up to an ever increasing mass of investors and is therefore more broadly positioned. According to experts, the dreaded regulation should only have a short-term negative impact on the price. In the long term, on the other hand, more security in terms of regulation would tend to create more trust.
Therefore, the same applies to this as to previous Bitcoin crises: sit out and carry on!
The crypto market experienced a new crash. Crypto fans always praised the digital currency as a security anchor in the depot. But the corona worries show again that
Note: This entry first appeared on December 6th, 2021. We have iHn updated and republished.