Why Bitcoin, Ethereum, and Dogecoin dropped and popped in the last 24 hours

Volatility is back in the crypto market.

| More on:
a shiba inu dog looks happily at eh camera with his tongue out while his owner hods him on his chest as he sleeps on a hammock.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened 

Cryptocurrency markets are having another wild day and there have been ups and downs along the way. Values dropped early in trading on Wednesday only to recover slightly in the morning. 

As of 10:40 a.m. ET, Bitcoin (CRYPTO: BTC) had traded in a range of $22,779 to as low as $20,071 in the last 24 hours and is currently down 3.9% over that time to $21,247. Ethereum (CRYPTO: ETH) was on an even wilder ride, seeing a high of $1,266 and a low of $1,013, but it's down 7.3% in the last 24 hours to $1,113. Dogecoin (CRYPTO: DOGE) traded as high as $0.0574 and as low as $0.0503 and is currently down 4% at $0.0541. 

So what 

There are a number of factors impacting crypto trading and most of it is bad news. The Celsius Network continues to be in trouble and users still have frozen accounts. That's causing potential liquidations of leveraged positions and it's unclear what the solution is. 

At the same time, crypto fund Three Arrows Capital appears to be in trouble as its leveraged positions have come under fire. The company's founder said the firm is "working this out" but that hasn't given much confidence to the crypto market. 

In general, leveraged investments in cryptocurrencies have backfired and traders are having trouble unwinding positions. And there's far more risk in the system than many people thought, sometimes in places they didn't know to look. 

Now what 

It's hard to argue against this being a "crypto winter" in many ways and I think leverage once again is the cause of a lot of big losses. The problem in cryptocurrency is that it doesn't have the same regulations as the banking industry to keep individual investors safe or firms from taking positions they can't unwind. Right now, those two factors are coming to a head. 

I'm still bullish on cryptocurrency and Web3 in general as a tool for innovation and disruption in technology, but crypto becoming a trading tool with billions of dollars in leverage has led to unintended consequences. Now, the market is seeing massive losses and even retail investors don't know when the selling will stop. 

I wouldn't be buying the dip unless you have a very long-term time horizon and are willing to hold until this market turns around. Crypto will be back, but might be under stricter rules around the world and not every cryptocurrency will survive. For the sake of the industry's health, this shakeout might be a good thing in the long run. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Travis Hoium has positions in Ethereum. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia owns and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

More on International Stock News

Blue electric vehicle on a green rising arrow with a charger hanging out.
International Stock News

Why Tesla stock was up again today

Tesla just hit the 3-million-vehicle milestone, but there is plenty more to come.

Read more »

Man and woman looking over documents at computer
International Stock News

Warren Buffett says this type of investor benefits most when stock prices fall

Thinking like a buyer can make market downturns easier to manage.

Read more »

asx share price rebound represented by wooden blocks spelling rebound with coins on top
International Stock News

Just how safe is the stock market right now?

Stocks are rebounding, but should you really invest right now?

Read more »

market sell off
International Stock News

Stock market sell-off: How I’m continuing to make passive income

I love my dividend stocks, and since I'm still not retired, market downturns let me buy more of what I…

Read more »

Iron ore bear market Fortescue dissapointed man and shadow bear with a tumbling down stock market
International Stock News

Your investments vs. a bear market: How to come out on top

Bear markets can provide a great opportunity for you to emerge in a better space after they end.

Read more »

A trendy woman wearing sunglasses is making it rain, spraying cash on that bargain.
International Stock News

3 US stocks that could be worth $1 trillion by 2032

Buying these stocks today could be a rewarding move in 10 years.

Read more »

A man clenches his fists with glee having seen the Lake Resources share price go up on the computer screen in front of him.
International Stock News

3 reasons I’m buying this crypto hand over fist

Polygon continues to showcase why it might just be the blockchain of the future.

Read more »

bull market encapsulated by bull running up a rising stock market price
International Stock News

Despite some big losers, these growth stocks are keeping the Nasdaq bull market going

Investors continue to slowly move away from worries about the economy, inflation, and interest rates, sending growth stocks higher. It's…

Read more »