Why Bitcoin, Ethereum and Dogecoin are struggling today
Today, investors seem determined to determine whether last week’s rally in the crypto market was a process of sustainable bottoming or simply a bear market bounce. Bitcoin (BTC -1.47%), Ethereum (ETH -1.21%)and Dogecoin (DOGE -0.51%), three of the largest cryptocurrencies by market cap, are all down today. As of 12:20 p.m. ET, these three tokens recorded declines of 2.8%, 3.1%, and 3.4%, respectively.
These moves come on a variety of different catalysts today.
Ethereum has perhaps the most bearish catalyst of note, as reported that XCarnival, an Ethereum lending protocol, was hit by a $3.8 million hack, sparking lingering concerns about the security of major ecosystems. blockchain. The XCarnival team reportedly got back 50% of its exploited assets, although the team was forced to suspend its smart contract as a result of this hack.
Bitcoin fell below the $21,000 level today as investors digest outflow reports that show over $450 million in net outflows of Bitcoin-related funds. This is the largest release week on record, and it highlights investor concerns about whether institutional capital will support top tokens at these levels.
Dogecoin seems to follow its mega-cap peers, as it usually does, in a more volatile way. However, today’s drop in this meme token also appears to reflect a larger reversion, after a significant surge last weekend, on Elon Musk’s tweets and higher volatility across the sector.
It was a mixed morning of trading stocks and cryptos. And while the past week has provided investors with a nice respite during this risk asset bear market, it should be noted that we are still in the midst of a rather aggressive bear market.
These confluences of headwinds for Bitcoin, Ethereum and Dogecoin are notable. Investors continue to be concerned about security, even with the most established blockchains, as hacks and downtime continue to dominate the headlines. Capital inflows, which have supported the positive price development of many of these projects, are also dissipating. And with investors looking to sell every tear (rather than buy every dip), it’s unclear if any kind of positive momentum can be sustained in this environment.
It’s been a very choppy year so far for crypto investors, with most of the chop on the downside. The various headwinds facing these top tokens are unfortunately widespread in the industry. In some ways, investors may see the fact that these big projects are not immune to such headwinds as a major concern for smaller, less liquid tokens.
There is certainly the potential for a strong upside rebound, if macroeconomic conditions improve and investors regain their sense of risk. Unfortunately, until this environment changes, the kinds of negative headlines we see are likely to drag even the most important cryptocurrencies down.