In one week, the largest cryptocurrency has gone from breaking new records to experiencing one of the biggest crashes in recent times. Today alone has reduced the price of Bitcoin by 13%. Ethereum has been hit even harder, losing 20% in 24 hours.
Cryptocurrencies are not only not immune to the bearish wave sweeping through financial markets. Digital assets are among the hardest hit. Proof of this are the falls recorded by its two top representatives in today’s session.
In the last 24 hours, the price of Bitcoin has dropped by more than 13% at times. In the case of Ethereum, the correction reaches 20%. Investors also give penalties of more than 20% to alternative cryptocurrencies (altcoins) such as Polkadot, Chainlink or Uniswap.
The most bullish crypto segment of the year, that of ‘meme coins’, also stands out today in terms of falls, with declines close to or greater than 20% in the prices of dogecoin, shiba inu, pepe and dogwifhat.
IG analysts note that “Bitcoin and cryptocurrencies in general are risky assets, and are located at the extreme end of the risk spectrum.” The alerts unleashed in the financial markets as a whole are encouraging a flight to safety and accelerating profit-taking in the most appreciated assets, such as cryptocurrencies.
Increased risk aversion hits the crypto market head-on. “The latest batch of poor macroeconomic data, which raises the prospect of a US recession, combined with the Fed’s continued aggressive stance, “It does not really induce investors to remain long in riskier assets,” explains Pierre Veyret, analyst at ActivTrades, in his report today.
The avalanche of sales on Wall Street following the US employment data published last Friday, geopolitical tensions and even “fluctuations in market predictions about the US presidential election.” have aggravated the downward pressure on cryptocurrencies, according to analysts at Avenue Digital Investments.
“Investors are looking for security,” adds ActivTrades, and this trend includes the decision to cash in on the profits obtained from the cryptocurrency rally.
Last Monday, Bitcoin touched US$70,000, one step away from its all-time high of US$73,800. Today it has fallen to US$52,000, the result of a 25% correction in one week. In the same period, the loss in the case of Ethereum has risen to 30%. Today alone, it lost 20%, trading at around US$2,300.
The second largest cryptocurrency is also suffering from the cold start to the new ethereum spot ETFs. Demand figures are light years away from those recorded during the first trading days of the bitcoin spot ETFs in January. This lower investor appetite accentuates the temptation to take profits in the crypto market.
