On 31 December, the world's first and biggest crypto was trading for US$88,430, according to data from CoinMarketCap.

Indeed, with the price then down some 30% from the all-time high of US$126,198, notched on 7 October, a lot of crypto investors were eyeing what looked like a potentially opportune dip at the start of this year.

So, how did they fare?

What would your $10,000 Bitcoin investment be worth now?

At the start of 2026, you could have bought 0.113 Bitcoin, excluding any potential brokerage or exchange fees, with your US$10,000 investment.

You could also denote that in satoshis. Named after Satoshi Nakamoto – the still unknown creator, or creators, of BTC – one BTC is equivalent to 100 million satoshis. So your US$10,000 would have netted you 11.31 million satoshis.

Now on Tuesday, 7 April, the BTC price edged lower, changing virtual hands for US$68,755 in late afternoon trade Aussie time. That saw the token commanding a market cap of US$1.37 trillion.

Unfortunately, it also means that the US$10,000 you invested in the world's top crypto at the start of the year is now worth $7,775, or a loss of 22.2%.

How about Ethereum (CRYPTO: ETH)?

If Bitcoin investors are out more than 22% year to date, how about Ethereum?

Well, on 31 December, the world's number two crypto by market cap was trading for US$2,971. Meaning you could have bought 3.37 Ethereum (again excluding any potential exchange or brokerage fees).

So, how did that crypto investment work out to date?

Well, on Tuesday afternoon, Ethereum was trading for US$2,108. That means your US$10,000 investment at the start of 2026 would now be worth US$7,095. Or a loss of 29.0%.

How does the Bitcoin performance compare to buying ASX shares or gold?

If, instead of buying Bitcoin or Ethereum, you decided to invest US$10,000 in an S&P/ASX 200 Index (ASX: XJO) tracking exchange-traded fund (ETF), you'd still have lost money.

But a lot less.

As of late afternoon on Tuesday, the ASX 200 had slipped 0.24% since market close on 31 December. So your US$10,000 investment would be worth a slightly diminished US$9,976 today.

As for gold, the yellow metal kicked off 2026 trading for US$4,319 an ounce. Despite the sharp decline in March, gold was still commanding US$4,649 in Tuesday afternoon trade.

That sees the gold price up just under 7.9% year to date.

And it means a US$10,000 investment in bullion at the start of the year would be worth US$10,789 today.

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That sees the world's first and biggest crypto up 9.6% over the past week. A week that sees the S&P/ASX 200 Index (ASX: XJO) down 1.1%.

As for the token's performance following the United States and Israel's airstrikes on Iran on 28 February and the ensuing broader Middle East conflict, Bitcoin's price is up around 10.5%. Bitcoin was trading for around US$65,600 before news of the attack broke.

Interestingly, the gold price has gone the other direction. Gold is currently trading for US$5,023 per ounce, down around 5% since the outbreak of the fighting.

Still, the gold price is up more than 67% over 12 months, while Bitcoin has tumbled around 14% over this time.

And despite the past week's rebound, the world's top crypto by market cap remains down more than 42% from its 7 October all-time high of US$126,199.

What the experts are saying about the Bitcoin price amid the Iran conflict

With the Bitcoin price up some 10% since the initial missile attack on Iran, a number of analysts say the digital token is beginning to live up to its haven promise.

According to Alex Kuptsikevich, chief market analyst at FxPro (quoted by Bloomberg):

It appears that Bitcoin is beginning to attract attention as a safe-haven asset, rising amid volatility in financial markets. The bulls are clearly trying to stir up the market to trigger a new short squeeze during the weekend, a period of reduced volatility.

Cici Lu McCalman, principal consultant and founder of Venn Link Partners, added:

Bitcoin has shown notable resilience, rebounding above $70,000 after briefly dipping below $63,000 during the initial risk unwind on Iran war. While the recovery is encouraging, price action still looks more like stabilisation than a full confidence to risk-on positioning.

As for further potential increases in the Bitcoin price, crypto investors may need to see some calm return to global energy markets and the broader geopolitical outlook.

"The macro backdrop remains unsettled, with oil volatility and lingering geopolitical uncertainty keeping risk sentiment cautious in the short term," Rachael Lucas, an analyst at BTC Markets, said.

How about Ethereum?

Like the Bitcoin price, the Ethereum (CRYPTO: ETH) price has outperformed gold and global equities since the outset of the Iran conflict.

On 28 February, Ethereum was trading for US$1,950. Today, the world's number two token is fetching US$2,171, up more than 11% since the fighting began.

But the Ethereum price remains down more than 56% since notching its own all-time high of US$4,954 on 25 August.

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Ethereum (CRYPTO: ETH), the world's second biggest crypto, is outpacing those gains today. The Ethereum price is up 7.1% since this time yesterday, trading for US$3,329. This sees Ethereum commanding a market cap of US$402 billion.

As for the two top cryptos' performance 14 days into 2026, that title also goes to Ethereum.

On 31 December, Ethereum was trading for US$2,973, which now sees the number two crypto up 12% year to date in 2026.

The Bitcoin price has gained 7.9% over this same time, having closed out 2025 trading for US$88,321.

Ethereum and Bitcoin price still well below all-time highs

Despite the solid start to 2026, both top cryptos remain well down from the record highs they notched in 2025.

Ethereum traded at an all-time high of US$4,954 on 25 August last year. This leaves the Ethereum price down 32.8% from that high watermark.

The Bitcoin price notched its own record high of US$126,198 six weeks later, on 7 October. Bitcoin is currently trading 24.4% below that all-time high.

The sell-down from those record highs for both cryptos was partly driven by profit-taking following months of strong gains. The latter half of 2025 also saw investors begin to question the pace and depth of likely interest rate cuts from global central banks.

Much like tech and other growth stocks, Bitcoin, Ethereum, and most non-stable coins have proven to be highly susceptible to interest rate moves. Most economists still expect at least one rate cut from the embattled US Federal Reserve in 2026, which could help support crypto prices.

Crypto waters are calming

Zerocap analyst Emir Ibrahim noted that the outsized moves crypto investors have historically experienced in the Bitcoin price have been smoothing out.

"For over a decade, Bitcoin's halving was a North Star for crypto investors," he said. "Things are a bit different as we move into 2026, however, and it has become clear that the rhythmic four-year boom-bust cycle is effectively broken."

According to Ibrahim

In previous cycles, we'd be bracing for a multi-year crypto winter right about now. Instead, we're seeing a market anchored by patient capital. It'd be hard to ignore that institutional participation has fundamentally changed the math on the asset class.

BTC ETFs alone now hold about US$140 billion, about 7% of total supply, and issuance has dropped below 1% annually.

Ibrahim concluded, "It's clear that BTC's volatility is no longer an outlier among other assets; it's on par with major high-growth tech stocks at the end of 2025."

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At time of writing in late morning trade on Friday, the world's first and biggest digital token is trading for US$87,038 (AU$134,922). That gives it a market cap of US$1.73 trillion.

Now, that's still a lofty valuation by longer-term standards. After all, only 10 years ago BTC was trading for just US$400.

But it's certainly been a painful journey for crypto investors arriving late to the party.

As you may recall, it was only on 7 October that the Bitcoin price rocketed to a new record high of US$126,198, according to data from CoinMarketCap.

Meaning crypto investors who bought at those levels will currently be nursing losses of 31%.

And with the vast majority of major cryptos joining the sell-off, we've now seen more than US$1 trillion wiped from the global digital asset sector.

Why is the Bitcoin price falling so hard?

Following the past five weeks rout, the Bitcoin price is now down 8.0% since this time last year. That sees the token significantly underperforming the 1.5% gains delivered by the S&P/ASX 200 Index (ASX: XJO).

Not to mention the 84.9% one-year gains posted by the S&P/ASX All Ordinaries Gold Index (ASX: XGD). An unwelcome reminder, perhaps, to those who've lauded the token as 'digital gold'.

The latest pressure on the Bitcoin price comes on several fronts.

First, investors are significantly paring back expectations of another interest rate cut from the US Fed this year. And Bitcoin has proven to be highly sensitive to interest rates.

Second, the token remains a risk asset. And with the Nasdaq Composite Index (NASDAQ: .IXIC) coming under pressure amid growing fears of a pending AI bubble burst, a lot of crypto investors look to be lightening their Bitcoin exposure, along with sending AI chip maker Nvidia Corporation (NASDAQ: NVDA) shares down 3.2% overnight.

Commenting on the US$1 trillion crypto collapse, said James Butterfill, head of research at CoinShares, said (quoted by Bloomberg), "Investors are stabbing in the dark a bit — they haven't got any direction on macro, so all they can see is what on-chain whales are doing and they're getting quite worried about it."

Matthew Hougan, chief investment officer at Bitwise Asset Management, added:

I think we are closer to the end of the selling than the beginning, but markets are uncomfortable and crypto could have more downside here before it finds a base to recover from.

What about Ethereum?

As mentioned, the Bitcoin price is far from the only one getting hammered lately.

Ethereum (CRYPTO: ETH), the world second biggest crypto, is down 6.3% over 24 hours, currently trading for US$2,847.

The Ethereum price is now down 42.5% since the token notched its own record high of US$4,954 on 25 August.

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The world's first and biggest crypto has been under steady selling pressure since notching new record highs in early October.

At the time of writing on Monday morning, Bitcoin is trading for US$93,701 (AU$143,779), down 1.9% since this time yesterday. This sees the token commanding a current market cap of US$1.86 trillion.

While that's still an eye-popping valuation, the Bitcoin price is now down a painful 25.4% since hitting an all-time high of US$126,198 on 7 October, according to data from CoinMarketCap.

And it sees the token's 12-month gains pared down to 3.5%, slightly underperforming the 3.8% one-year gains delivered by the S&P/ASX 200 Index (ASX: XJO).

Bitcoin, and a handful of other cryptos, were among the biggest beneficiaries following Donald Trump's sweeping US presidential election win. Trump is a strong advocate of cryptocurrencies. In March, he signed an order to establish a strategic US crypto reserve.

So, what's going on with the price collapse?

What the experts are saying about the slumping Bitcoin price

According to Matthew Hougan, chief investment officer for Bitwise Asset Management (quoted by Bloomberg), "The general market is risk-off. Crypto was the canary in the coal mine for that, it was the first to flinch."

Indeed, while the Nasdaq Composite Index (NASDAQ: .IXIC) is still up 21.9% over 12 months, the tech-heavy US index is down 4.4% from its own October record closing highs.

"The sentiment in crypto retail is pretty negative," Hougan added. "They don't want to live through another 50% pullback. People are front running that by stepping out of the market."

Hougan also said that he views the Bitcoin price retreat as a buying opportunity.

Jake Kennis, senior research analyst at Nansen, noted (quoted by Bloomberg):

The selloff is a confluence of profit-taking by LTHs [long-term holders], institutional outflows, macro uncertainty, and leveraged longs getting wiped out. What is clear is that the market has temporarily chosen a downward direction after a long period of consolidation/ranging.

Chris Newhouse, director of research at Ergonia, reminded crypto investors that the material price swings we're seeing over the past month are par for the course in the world of crypto investing.

"The markets are always an ebb and flow, and cyclicality in crypto is nothing new," he said.

Taking a step back, the Bitcoin price remains up 462% over five years.

What about Ethereum?

Ethereum (CRYPTO: ETH), the world's second biggest crypto with a market cap of US$373 billion, has also not been spared the selling pressure that's hit the Bitcoin price.

The Ethereum price is down 2.1% over 24 hours at US$3,091.

That sees the Ethereum price down 37.6% since hitting its own all-time high of US$4,954 on 25 August.

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In sharp contrast to former US President Joe Biden's tighter regulatory approach, Trump is a big advocate of a free market approach to cryptocurrencies. And a look at the price charts shows investors have taken note.

Here's what I mean.

On 5 November, the world's first and biggest cryptocurrency, by market value, was trading for US$67,811.

By 20 January, the day Trump was sworn into office, the token hit an all-time high of US$109,115, up a blistering 61%.

But with risk assets coming under pressure in February, Bitcoin joined the sell-off, dropping to US$79,049 on 28 February.

As for these early days in March, the Bitcoin price surged 11% on Monday to hit US$94,811.

And it wasn't the only crypto to go ballistic.

The Ethereum (CRYPTO: ETH) price soared 17%; XRP (CRYPTO: XRP) rocketed 33%; Solana (CRYPTO: SOL) surged 26%; and the Cardano (CRYPTO: ADA) price roared 75% higher.

And once again, crypto investors have Donald Trump to thank for the big moves higher.

How Trump just goosed the Bitcoin price…again

Over the weekend, Trump threw some greater light on his January executive order that the US would build a strategic reserve of cryptocurrencies.

As you may have guessed from Monday's big move for the Bitcoin price and the other four cryptos named above, Trump posted on Truth Social that the strategic reserve will include Ethereum, Bitcoin, Cardono, Solano, and XRP.

What are the experts saying?

Commenting on the US announcement that sent the Bitcoin price and other cryptos soaring, Josh Gilbert, market analyst at eToro, said, "We always knew that Trump's presidency would be pivotal for crypto throughout his term, and this is a sign of how quickly the market can turn on a dime. "

He noted that the rebound this week "follows the broader crypto market sell-off last week as the largest cryptocurrency heist in history and the implementation of tariffs in the US sent ripple effects across markets".

Gilbert added:

Sentiment in the crypto market has dropped significantly but has recovered from the 'extreme fear' of last week to just 'fear' territory this week, thanks to Trump's announcement over the weekend.

Federico Brokate, head of US business at 21Shares, said (quoted by Reuters):

This move signals a shift toward active participation in the crypto economy by the US government. It has the potential to accelerate institutional adoption, provide greater regulatory clarity, and strengthen the US's leadership in digital asset innovation.

The Bitcoin price is currently at US$87,648.

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Bitcoin (CRYPTO: BTC) has made another notable 24-hour move today, increasing 2.6% since 4 p.m. ET yesterday (as of 1:30 p.m. ET), with Ethereum (CRYPTO: ETH) and Dogecoin (CRYPTO: DOGE) also catching a bid, surging 3.8% and 4.4, respectively, over the same time frame.

These moves have taken Bitcoin back toward the pivotal $100,000 mark, with the world's largest digital asset continuing to hover around this critical level. Ethereum's and Dogecoin's outsize moves make sense in the context of the larger dynamics that are typically at play with respect to these three megacap projects, but let's dive into what's happening beneath the surface and driving such broad momentum in the crypto market as a whole and for these three projects in particular.

It's a macro day, baby

Most of the discussion on traditional media (and social media platforms as well) this morning revolves around today's Consumer Price Index (CPI) report, which came in lower than expected. Core CPI unexpectedly declined one-tenth of 1%, leading to a surge in interest among investors for higher-growth and more speculative asset classes.

Of course, the fact is that overall inflation at 2.9% is still meaningfully higher than the Federal Reserve's target, and there are concerns around Trump's potential tariff plans and how the bond market will continue to react to potentially higher deficits and growth over the next four years.

But with this lower-than-expected core reading, the market now has priced in a greater likelihood of continued interest rate cuts. These implied cuts have put pressure on the U.S. dollar and improved the risk-reward outlook for risk assets, all factors that should benefit megacap cryptocurrencies such as Bitcoin (which is more tethered to currency movements than the other two), Ethereum, and Dogecoin.

Are animal spirits ahead?

On a day when there's relatively little in the way of token-specific catalysts, sometimes market sentiment tied to macro conditions easing is enough to provide a rising tide that lifts all boats. And given that crypto as an asset class is about as far out on the risk spectrum as most traditional investors are willing to go, today's outsize moves (which are greater than the moves seen in most indexes today) reflect this reality.

Aside from the impact on the U.S. dollar this CPI report is likely to have (which will benefit Bitcoin), all risk assets should benefit from longer-term yields heading lower. That's because the 10-year U.S. Treasury yield is most often viewed as the appropriate discount rate for equities and other risk assets. For crypto investors with a long-term investing time horizon, discounting future growth to the present requires some sort of interest rate, and this is the particular figure most investors are paying close attention to right now.

I think if macro conditions continue to soften, and investors believe that more accommodative monetary policy is on the horizon, it's possible animal spirits could roar back once again. Bitcoin, Ethereum, and Dogecoin are each widely considered to be quality digital assets by their associated communities. Perhaps today's CPI report is what they needed to hit the bid once again.

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

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Cryptocurrencies had another great day on Wednesday, and the biggest tokens led the market. Bitcoin (CRYPTO: BTC) is once again trading above $100,000, which is a critical psychological level for traders.

As of 3 p.m. ET, in the past 24 hours alone, Bitcoin is up 5.3%, Ethereum (CRYPTO: ETH) has jumped 5.2%, and Dogecoin (CRYPTO: DOGE) is up 7.9%.

The Fed and how it affects cryptocurrencies

The Bureau of Labor Statistics announced this morning the closely watched Consumer Price Index (CPI) was up 2.7% from a year ago, 0.1% higher than in October, but in line with estimates.

Traders are now convinced this will be the final data point needed to cut the federal funds rate to between 4.25% and 4.5% later this month. According to the CME, the odds of a cut are now at 94.9%.

As much as crypto bulls want to say cryptocurrencies are about upending the current financial system, the biggest driver of higher values in crypto is interest rates and the actions of the Federal Reserve. When rates were going up, crypto fell, and now that rates are coming down, crypto is rising again.

That shows crypto is trading more like a speculative asset than based on any fundamentals.

Back to the old narratives

The moves higher in Bitcoin and other cryptocurrencies since early November were all about the election. But that trade seems to be slowing as it gets priced into the market and traders look for the next catalyst. They found it today with lower rates, which could make borrowing less expensive and theoretically drive more economic activity.

That's the same narrative that drove crypto in 2020 and 2021, but reversed when interest rates started rising. We are now back to the old themes, with trading dependent on rates for tailwinds or headwinds.

I will note that while the federal funds rate gets the most attention, the 10-year rate is more important to businesses borrowing money to grow. And that rate is still up sharply in the last three months and flat for 2024.

10 Year Treasury Rate data by YCharts

Where does crypto go from here?

The changes in interest rates and potential regulation of crypto will be good for the industry, but not in the ways a lot of tokens are moving. I think it's real utility, like lower-cost financial transactions, stock trades on the blockchain, and subscriptions or loyalty programs on the blockchain, that will be unlocked from a changing administration.

Some of that value may flow to tokens themselves, but Bitcoin and Ethereum are notoriously slow and costly blockchains, and Dogecoin is a meme coin. It's unlikely these are the places entrepreneurs build real businesses in 2025 and beyond. Those businesses will likely be built on other blockchains.

Buyer beware of the pop

Momentum is strong in crypto today, and that may last for some time. But the value of Bitcoin, Ethereum, and Dogecoin will only go higher as long as more money is flowing into the ecosystem. And that momentum may stop as signs of a worsening economy continue to percolate through the economy.

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

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The word is out: Bitcoin (CRYPTO: BTC) is pumping, meme coins are soaring, and the broader crypto market is booming. Yet Ethereum (CRYPTO: ETH), the world's second-largest cryptocurrency, remains stuck in the doldrums. Despite its reputation as a groundbreaking blockchain for decentralised applications (dApps) and smart contracts, Ethereum has struggled to match Bitcoin's breathtaking rise or maintain pace with the majority of other cryptocurrencies.

But for ETH holders or prospective investors, there's reason for hope. While Ethereum's recent performance might seem underwhelming, several underlying factors point to potential recovery and long-term value. Here are three critical things every crypto investor should know about Ethereum today.

1. Ethereum has struggled to keep pace with Bitcoin

To understand Ethereum's current position, it's essential to look at its performance relative to Bitcoin. This is best captured by the ETH/BTC chart, which measures Ethereum's price in terms of Bitcoin rather than U.S. dollars. Why does this matter? Charting ETH in BTC-based terms reveals how Ethereum fares against the market leader, providing insight into its relative strength -- or lack thereof.

For more than two years, Ethereum has been "bleeding" value relative to Bitcoin. In simpler terms, investors would have been better off holding Bitcoin instead of Ethereum during this period. For many, including myself, this has been a bitter pill to swallow.

However, there's a silver lining: ETH/BTC is now near historical lows. While this doesn't guarantee an immediate rebound, such low valuations often represent potential inflection points.

2. Why Ethereum is struggling so much

Ethereum's underperformance isn't just about Bitcoin's dominance -- it also stems from internal challenges. A key factor is the rise of Layer-2 (L2) networks, such as Arbitrum, Optimism, and Base. While these innovations are designed to scale Ethereum by processing transactions in batches, they've inadvertently disrupted one of Ethereum's core value drivers: its fee burn mechanism.

To understand this, let's break it down into smaller pieces:

• The fee burn mechanism: Since Ethereum implemented EIP-1559, a portion of transaction fees is burned (removed from circulation). This process is intended to reduce Ethereum's supply and create deflationary pressure as more transactions occur on the network.
• Layer-2 basics: Layer-2 networks batch transactions and then publish them to Ethereum's main blockchain in bundles known as "blobs." This process reduces congestion and makes Ethereum more scalable. Because they are faster and cheaper to use, Layer-2s have seen an explosion of activity.
• The Dencun upgrade: Introduced in March 2024, this upgrade made it cheaper for L2s to publish blobs to Ethereum. While this improved scalability and reduced costs, it also caused a steep decline in transaction fees paid to Ethereum's main network.

Add it all up, and the issue is clear to see. With more transactions occurring on Layer-2 networks, Ethereum's burn rate has taken a hit. While the fee burn mechanism introduced with EIP-1559 made Ethereum deflationary for nearly a year, this has changed, since Ethereum's inflation rate has climbed steadily since the Dencun upgrade went live.

3. Signs of hope for Ethereum's recovery

Despite these challenges, Ethereum's future isn't all gloom and doom. There are tangible signs of recovery and renewed momentum that investors should pay attention to.

Notably, over the past three weeks, Ethereum's transaction count (a proxy for fee generation and burn) is on the rise. Whether it's decentralised finance (DeFi) protocols, meme coin trading, or broader market enthusiasm, activity on Ethereum is increasing. If this trend continues, Ethereum could soon flip back to a deflationary state, boosting its value proposition.

Furthermore, Ethereum's developer community is actively discussing ways to address the impact of L2 networks on ETH's value. A recent proposal named EIP-7781 aims to enhance Ethereum's core performance to attract more activity and increase the burn process. While these discussions are still in early stages, they underscore that Ethereum developers are aware of the issue, and solutions could be on the horizon.

Finally, it's important to consider how broader economic factors could give Ethereum a lift. With the Federal Reserve lowering interest rates, risk-on assets like Ethereum and other cryptocurrencies often benefit. Historical trends support this: In 2019, the Fed's shift from raising rates to cutting them eventually provided a tailwind for Ethereum. This momentum grew even stronger when the Fed introduced quantitative easing, further boosting its performance.

Final considerations to keep in mind

It's been a tough ride for Ethereum investors, especially over the past year and a half, as ETH has lagged behind Bitcoin and the broader market. However, this isn't uncommon. Historically, the years following Bitcoin halvings tend to be Bitcoin-dominated, with Ethereum and other assets playing catch-up later in the cycle.

While no one can predict the future, I believe Ethereum's foundation remains strong. With increasing network activity, ongoing developer innovations, and macroeconomic tailwinds on the horizon, Ethereum appears well-positioned for a recovery. As this bull market progresses, ETH holders may find themselves rewarded for their patience.

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

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As far as large-cap cryptocurrencies are concerned, Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) continue to be three of the most closely watched digital assets investors are tracking, especially following the post-election rally these particular tokens have seen.

Each of these three major crypto projects has seen significant gains over the past three weeks, though some selling pressure has begun to build for these top-10 projects today. As of 3 p.m. ET, Bitcoin, Ethereum, and Dogecoin have declined 3.1%, 5.1%, and 5.6%, respectively, over the past 24 hours.

Now, it's worth keeping in context Bitcoin's outperformance relative to Ethereum and Dogecoin. This recent surge for Bitcoin has led the world's largest cryptocurrency to fresh all-time highs this past week (nearly breaking through the key $100,000 per token price level, before giving up some of these gains in recent days).

Today's decline has the top dog in the crypto world hovering around $93,000 per token at the time of writing, with Ethereum and Dogecoin still 32% and 48% off their all-time highs, respectively.

Let's dive into what's leading to today's selling pressure for these important crypto bellwethers today.

Selling pressure coming from all sides

Bitcoin's decline today appears to have sparked a larger sell-off in many digital assets. Indeed, whichever direction Bitcoin tends to head over the short term, it's usually the case that most other speculative assets in this space tend to follow, and today is no different.

Recent reports that spot Bitcoin ETFs saw their third-largest single-day outflow yesterday suggest that institutional money that may have flowed into this asset earlier this year is looking to take some profit off the table. Retail investors also appear to be following suit, with a number of prominent crypto experts pointing to profit-taking-like selling activity being noticeable on a number of top exchanges.

Interestingly, Ethereum has seen net outflows over the past week as well (according to data from CoinGlass), suggesting that a range of investors may be reconsidering position sizing and risk management after what's been an incredible rally in these two top tokens.

Additionally, with liquidations data being relatively balanced for Bitcoin but skewed toward leveraged short bets on Ethereum and Dogecoin, there may be some indication that near-term selling pressures could be abating as these positions unwind.

Today's price action for Dogecoin shouldn't be surprising, given the high level of correlation that's typically seen between this speculative meme token and both Bitcoin and Ethereum. While various political catalysts have supported Dogecoin's recent rally (Trump's victory, and by extension the proliferation of Elon Musk within the political sphere, has propelled Dogecoin higher following the election), it's also true that Dogecoin typically trades with much greater volatility than Bitcoin and Ethereum. What that means is that on days like today, investors ought to be prepared for outsized moves to the downside, which is what we're seeing once again.

What to make of today's decline

As mentioned, there are some interesting liquidations data that suggest (at least for Ethereum and Dogecoin) perhaps today's selling pressure may be coming to an end. As leveraged short bets are increasingly closed out, fresh capital looking to place wagers on the directional moves of these volatile assets can reset, meaning the ultimate direction each of these three tokens is headed in is uncertain right now.

We'll have to see how net inflows/outflows data come in for spot ETFs in the coming days, and I'll be paying close attention to liquidations activity as well as various utilisation metrics for these three networks over time.

For now, it does appear that the speculative frenzy in crypto assets is fizzling, at least over the short term. But with the strong election-related tailwinds still behind this sector, investors who may be looking for entry points may consider this more recent dip as a buying opportunity, so I wouldn't be surprised to see another rally take place coming out of this consolidation phase.

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

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One of the hottest investments these days is a fifteen-year-old currency that doesn't exist in physical form.

That's right. Our mystery bachelor is Bitcoin (CRYPTO: BTC), which across that decade-and-a-half long stretch has been the most familiar and popular cryptocurrency. That's a fine position to be in these days since investors have eagerly been piling into all manner of digital coins and tokens since Election Day. As Bitcoin is the undisputed crypto leader it has rocketed to new heights. Might it even cross the $95,000 level by weekend's end?

Mighty tailwinds

As we glide into the holiday season with the presidential poll freshly in the past, cryptocurrencies are benefitting from an unprecedented set of tailwinds.

There's the election, which is delivering to the White House not one but two men who've strongly indicated support for the crypto industry. Vice president-elect J.D. Vance, in fact, is a holder of Bitcoin as per recent election filings, so at the very least, he's likely to be displeased with any concentrated attempts to regulate it.

This blends well with the economy, which continues to thrive and seems to be exorcising that scary ghost of inflation. Everyone's least favorite economic development continues to weaken -- fingers crossed -- with the growth in the consumer price index (CPI) easing in the last few measurements.

That, in turn, has led to lower interest rates, to the tune of a cumulative 75 basis point reduction in the Federal Reserve's (Fed) key rate over the past two months. The regulator started hiking rates in the thick of the coronavirus pandemic in mid-2022. This was the start of a more than two-year series of raises aimed at getting the once-hibernating but suddenly resurgent inflation under some control.

All things being equal, lower interest rates are beneficial for assets on the more risky side of the investment spectrum, like cryptocurrencies. One major effect of lower rates is that they reduce the competitiveness of investments considered to be safe. At the same time, they enhance the attractiveness and potential returns of riskier assets.

Room to run

This past weekend provided even more rocket fuel for Bitcoin and, as ever in the rallies it inspires, a wide range of altcoins such as Ethereum, Dogecoin, and many others.

One big advantage cryptos have over traditional investments like stocks is that, as decentralised assets, they're not beholden to the finance industry's long tradition of set trading hours. So this past Saturday and Sunday, investors with insufficient opportunity to trade during the work week piled in on the weekend. Rolling into Monday, Bitcoin had zoomed past the $80,000 price barrier and was teasing $90,000, setting new all-time highs on the way.

Looking at the market right now, it's entirely possible that Bitcoin will hit that $95,000 level this week. But no rally lasts forever, and given the recent leaps that make this one feel like a bubble, I feel some degree of correction will occur before long.

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

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And by 'it' I mean racing into new record-high territory.

The world's original and biggest cryptocurrency is up more than 11% over the past 24 hours, currently trading for US$89,476.02 (AU$133,392.78). Just two hours ago the token hit a new high watermark of US$89,604.50.

At time of writing, this sees the Bitcoin price up 32% over the past week and up 158% over 12 months.

It also gives the digital token an eye-watering market cap of US$1.76 trillion dollars.

And it's not just Bitcoin that's soaring.

Ethereum (CRYPTO: ETH), the world's second-biggest cryptocurrency with a market cap of US$403 billion, is up 4% in a day and up 40% over the past week, trading for US$3,345.10. Unlike Bitcoin, Ethereum remains some 32% below its 16 November 2021 record high of US$4,892.

What's sending cryptocurrencies soaring?

The biggest driver behind the surge in the Bitcoin price and most other global cryptocurrencies is the decisive election of Donald Trump in the United States presidential election last week.

With Trump's Republican party also commanding a majority in the US Senate and looking to do the same in the House of Representatives, crypto investors are looking forward to Trump's decidedly pro-crypto policies.

Unlike the increased crackdowns looming under a renewed Democratic presidency, Trump aims to ease the rules around crypto and has spruiked the idea of creating a strategic US Bitcoin stockpile.

Judging by the soaring prices posted by the vast majority of the top 100 cryptocurrencies in the week since the US election, the market appears confident Trump will follow through with his pledges.

What are the experts saying about the rocketing Bitcoin price?

Commenting on the soaring Bitcoin price, Caroline Bowler, CEO of BTC Markets said:

Investor optimism has surged with the return of Donald Trump's presidency, as his pro-growth economic policies and favourable regulatory outlook help restore confidence in the financial markets, particularly in digital assets.

BlackRock's Bitcoin ETF has seen a record-breaking US$1.1 billion in single-day inflows, an unprecedented milestone for any ETF, especially one launched in January 2024. This surge underscores strong investor confidence…

Chris Weston, head of research at Pepperstone Group said Bitcoin is in "beast mode."

"The question for traders not already set is whether there is still room to chase this red-hot play or wait for a slight retracement and for some of the heat to come out of the impulsive trend," Weston said (quoted by Bloomberg).

As for what to expect from the Bitcoin price now, Weston added there was "little value" in this kind of speculation (quoted by The Australian Financial Review):

The chase is on, and with such significant inflows into the respective bitcoin ETFs, many feel that a change of regulatory regime is the green light for increased institutional adoption.

Putting a near-term target on where Bitcoin can trade seems a task that offers little value, as this is now about the art of holding and pushing for that genuine outlier in the distribution.

The post Why did the Bitcoin price just rocket to another all-time high? appeared first on The Motley Fool Australia.

The world's original and biggest cryptocurrency topped US$76,460 (AU$116,769) for the first time ever.

It's since retraced a tad, currently trading for US$75,280, up 8% since this time yesterday. That sees it with an eye-popping market cap of US$1.49 trillion.

And it's not just the Bitcoin price that's rocketing.

Ethereum (CRYPTO: ETH), the second-biggest cryptocurrency with a market cap of US$327 billion, was up 10% over 24 hours. It is currently trading for US$2,706.

Unlike its bigger and older brother, however, the Ethereum price is still 44% below its own all-time high of US$4,892, reached on 16 November 2021.

On a broader level, according to data from CoinMarketCap, 98 of the world's top 100 cryptocurrencies are trading in the green today.

And Bitcoin investors look to have Donald Trump's victory in the United States presidential elections to thank for that. The former and future US president has made his support for the crypto sector very clear.

What the experts are saying about Bitcoin and cryptocurrencies

Commenting on the big run higher for the Bitcoin price and most other cryptocurrencies, Mena Theodorou, co-founder at Australian crypto exchange Coinstash, said:

With this shift in US leadership, the cryptocurrency sector is poised to enter a pivotal period under President Trump's administration. His commitment to deregulation and campaign promises to position the US as the 'crypto capital of the planet' could drive unprecedented innovation within the sector. We anticipate greater institutional investment and retail adoption worldwide.

Theodorou cautioned that, "In the short term, however, this election result introduces an element of unpredictability, with the potential for heightened market volatility."

John Toro, head of trading at Zerocap, added:

Following the US Presidential election, risk assets have performed particularly strongly, in line with expectations of forward-looking fiscal policy by the Republican nominee and now President Donald Trump.  Of particular note, has been the strength of cryptocurrencies, led by Bitcoin…

The cryptocurrency community are particularly excited by the expected progression of digit asset regulation, as well as the potential for BTC to be included as an asset base of US foreign reserves.

Pity the short sellers

Just as with ASX shares, investors can take up short positions on Bitcoin, Ethereum and other cryptocurrencies.

And short sellers betting against a renewed Bitcoin rally are feeling the pain today.

"The spot market is flying, and bitcoin shorts are getting decimated," Swyftx lead analyst Pav Hundal said (quoted by The Australian Financial Review).

Hundal continued:

Rightly or wrongly, a lot of traders in Asia-Pacific are betting that the crypto summer is back and right now, local retail is trading strongly. It's almost all buy action on our order books right now…

It is quite likely that we will see a correction heading into the US trading window… But this is spot-driven demand and that makes it meaningful. It's not a derivatives-fuelled pump.

The Bitcoin price is now up 121% over 12 months.

The post Why cryptocurrencies like Bitcoin and Ethereum are shooting for the moon today appeared first on The Motley Fool Australia.

To say the least.

Over the last 24 hours, Bitcoin is down 4.0% to US$58,316 (AU$88,161), according to data from CoinMarketCap. That gives the world's biggest cryptocurrency a market cap of US$1.15 trillion.

While the Bitcoin price is up 103% since this time last year, it's down 21% from the all-time high of US$73,750, notched on 14 March this year.

Ethereum (CRYPTO: ETH), the second-biggest crypto with a market cap of US$319 billion, is holding up a little better today. The Ethereum price is down 1.7% over 24 hours, trading for US$2,654.

This sees the Ethereum price up 47% over 12 months. But the world's number two crypto is still down 46% from its own all-time high of US$4,892, which it reached all the way back on 16 November 2021.

How has the Bitcoin price been moving?

Despite the sizeable 24-hour retrace, the Bitcoin price remains up 1.5% over the past seven days. That trailed the 7.9% one-week gain delivered by the Ethereum price.

As for that volatility, over the past 30 days Bitcoin has traded at lows of US$49,121 and highs of US$69,988.

So, while the one-year gains may be impressive, the token is certainly not living up to its billing as digital gold.

Over the past 30 days the gold price, by comparison, traded at a low of US$2,365 per ounce and a high of US$2,473 per ounce. The yellow metal is currently fetching US$2,452 per ounce.

As you'd expect, some of the wildest volatility for crypto investors came in early August. That's when the S&P/ASX 200 Index (ASX: XJO) and global stock markets were whipsawing by several percentage points on a daily basis.

Now, when we're talking about the ASX 200 or the S&P 500 Index (SP: .INX) a daily move of 3% to 4% is considered huge.

Not so for cryptos.

On 5 August, a day that saw the ASX 200 plunge by 3.7%, the Bitcoin price dropped from US$60,873 to US$49,843 over a 24-hour period. That's an 18.1% loss in a single day.

While Bitcoin has since rebounded 17.0% from that low, investors looking for exposure will need to be able to stomach these kinds of outsized price swings.

Are there ASX ETFs that give crypto exposure?

ASX 200 investors looking for exposure to the Bitcoin price without buying the crypto themselves might want to consider the VanEck Bitcoin ETF (ASX: VBTC).

The exchange-traded fund (ETF) made its debut on the ASX in June.

The VanEck Bitcoin spot ETF is intended to mimic the Bitcoin market price.

VanEck Asia Pacific CEO Arian Neiron explained said VBTC "makes Bitcoin more accessible by managing all the back-end complexity".

Neiron added that "understanding the technical aspects of acquiring, storing and securing digital assets is no longer necessary".

The post What's happening with the Bitcoin price amid the stock market volatility? appeared first on The Motley Fool Australia.

At the time of writing, Bitcoin is trading for US$28,036 (AU$40,465).

That puts the world's top crypto up some 69% so far in 2023.

And it's not just the Bitcoin price that's shooting the lights out this past week.

Ethereum (CRYPTO: ETH), the world's number two crypto by market valuation, is up 12% since last Monday.

One Ether is currently trading for US$1,783.

What's driving the Bitcoin price higher?

The Bitcoin price looks to be getting some solid tailwinds on two fronts.

First, there's the past week's succession of banking failures that commenced in the United States with Silicon Valley Bank's collapse and spread to Europe to Credit Suisse and others.

As you may be aware, Bitcoin was born in the wake of the global financial crisis. Satoshi Nakamoto (the name used by the crypto's founder or founders) wrote the white paper that launched the token when trust in the global financial system was at a low point.

Now that trust is again being tested.

"An environment where higher interest rates after a period of hyper-low interest rates are creating bank runs is about as perfect a Bitcoin use-case as one can think," CEO of FRNT Financial Stephane Ouellette said (courtesy of Bloomberg).

The Bitcoin price also looks to be benefiting from investor expectations that the global banking woes will force the US Federal Reserve and other central banks to ease off their aggressive rate-tightening paths.

"Given the uncertainty, we are not yet seeing mass retail or institutional inflows into the market," crypto analyst Noelle Acheson said.

"What is moving the market is the shifting liquidity environment," she added, noting "expectations are consolidating around a much lower rate-hike ceiling than expected even a week ago. That environment is good for risk assets, and especially Bitcoin which has no earnings or credit vulnerability."

Proceed with care

While some crypto investors have made tidy profits, many have been stung by leaping in when FOMO strikes.

While the Bitcoin price could continue to march higher from here, it could also head in the other direction.

Remember, even after this year's remarkable rally, Bitcoin is still down more than 59% from its all-time high of US$68,790 reached on 10 November 2021.

Invest with care.

The post Bitcoin price rockets 28% in a week amid 'perfect use case' appeared first on The Motley Fool Australia.

In Australia, millions of consumers have had to deal with the theft of their private information from Medibank Private Ltd (ASX: MPL) and Optus.

Globally, the finance industry has been left bemused — and distressed — at the collapse of giant crypto exchange FTX.

While these issues are front-of-mind, the Australian Securities and Investments Commission this month warned Australians to be vigilant about crypto scams.

According to ASIC deputy chair Sarah Court, Australians lost in excess of $710 million from investment fraud in 2021, which was a shocking 135% higher than the previous year.

"The main driver of the increase was cryptocurrency investment scams, where losses increased by 270%," she said.

"The ACCC have advised that losses to crypto scams have increased further in 2022."

If you're in one of these 10 situations, watch out

The corporate watchdog stated crypto scams fall into one of three broad types:

• Scams where the investor thinks they're putting money into a genuine asset, but the app, exchange or website is fake
• Scams selling fake crypto tokens to steal your legitimate cryptocurrency (like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH)) in return and crypto trading jobs that are just facilitating money laundering
• Scams that use digital assets to make a payment

So how can you tell if something is a scam? 

ASIC has published 10 signs that likely mean you're dealing with a criminal trying to steal money or data. 

Be very suspicious if one or more of these things happen to you:

1. You receive a golden offer or opportunity just out of the blue
2. You see a faked celebrity endorsement
3. A romantic interest you only know online starts asking for crypto
4. You're pressured to transfer crypto from your current wallet or exchange to another site
5. You're directed to pay for a financial service using crypto
6. The app you're about to install isn't available on Google Play or the Apple Store
7. You have to pay a fee to access your own money
8. You are guaranteed a certain level of returns or offered free money
9. Unfamiliar digital tokens land in your digital wallet
10. The exchange withholds investment returns for supposed "tax purposes"

Court implored those who suspect they've fallen for a scam to "act quickly".

"Don't send any more money. Block all contact from the scammer," she said.

"Do not delay. Contact your bank or financial institution immediately to report the scam. Ask them to stop any transactions. Also, warn your family and friends so they can watch out for potential follow-up scams."

The deputy chair reminded investors that financial loss is not the only cost when falling victim to such fraud.

"Scams cause emotional stress and can impact relationships."

More information on crypto scams can be found on ASIC's Moneysmart website. Crisis support is available through Lifeline on 13 11 14 and emotional support via Beyond Blue on 1300 22 46 36.

The post Top 10 signs you've been crypto-scammed appeared first on The Motley Fool Australia.

Unfortunately for crypto investors, volatile in this case means they have fallen in value, and substantially so. At the start of this week, you could exchange one Bitcoin for just under US$21,000. Today, that same coin is going for around US$17,000. That's a drop close to 20%. Ouch.

It's been even worse for the second-largest cryptocurrency by market capitalisation, Ethereum. Ethereum has fallen from around US$1,550 at the start of the week to the US$1,232 it is commanding today, a fall of more than 21%.

These falls can probably be attributed to the disaster of the global cryptocurrency exchange FTX. As my Fool colleague Bernd dug into this week, FTX is, or at least was, one of the largest exchanges in the world. But after a liquidity crisis, FTX is now in deep trouble and could be facing collapse.

All of this roiled crypto markets and sent Bitcoin to its lowest price in two years. But could this affect the share market?

Has Bitcoin's woes affected ASX shares this week?

After all, many cryptocurrency investors also invest in shares, and vice versa. So investors might be wondering how this massive volatility in the crypto markets could affect their ASX shareholdings.

We're used to hearing arguments in favour of investing in cryptocurrencies that involve the supposed lack of correlation these markets have with other assets like shares. After all, many investors still call Bitcoin 'digital gold'.

Well, what happens in cryptocurrency markets can certainly affect shares that are involved in the crypto markets. Fellow crypto exchange Coinbase Global Inc (NASDAQ: COIN) shares have lost more than 15% over the past five trading days. And the ASX-listed BetaShares Crypto Innovators ETF (ASX: CRYP) has lost more than 20%.

But apart from these crypto-linked companies, the markets overall seem unfazed. Over those same five days, the NASDAQ-100 (NASDAQ: NDX) has risen by a very healthy 6.4% or so. The S&P/ASX 200 Index (ASX: XJO) is up 3.85%, while the American benchmark S&P 500 Index (SP: .INX) has gained over 5%. Even gold is up big.

So it seems that, at least this time, volatility in the cryptocurrency markets has not even touched our share portfolios.

The post How might volatile crypto prices impact your ASX shares? appeared first on The Motley Fool Australia.

It's hard to imagine that just a year ago, many notable cryptocurrencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) hit new all-time highs.

In November 2021, the most valuable cryptocurrency, Bitcoin, peaked at around $67,000. Meanwhile, the second-most valuable cryptocurrency, Ethereum, notched an all-time high just shy of $4,900.

That month, the market cap of the cryptocurrency asset class reached a collective value of over $2.8 trillion, a new record. But since then, Bitcoin and Ethereum are both down nearly 65% from their highs and the total crypto market cap sits at just over $1 trillion, a fraction of what it once was.

After this kind of obliteration, concerns are likely warranted. If you're a new crypto investor, this is likely your first time witnessing a price decline of this magnitude. Welcome to crypto.

The overall trajectory of cryptocurrencies has climbed over the past decade. Still, it seemed all hope might just be lost in some brutal stretches. Let's take a look at some of those rough patches to put the current one into a little better context. 

Seasons come and go

One of the first crypto bear markets occurred throughout most of 2014 and 2015. After the asset class hit a new market cap all-time high of more than $15.5 billion in December 2013, a slow descent ensued over the next two years and bottomed around $3.7 billion in May 2015, a 75% decrease.

During that same period, Bitcoin lost 80% of its value and went from around $1,100 to just a few hundred dollars.

Yet prices returned to new highs by January 2018. The total crypto market cap reached more than $827 billion and Bitcoin hit a price of almost $20,000, jumps of 22,000% and 9,400%, respectively. 

Those highs were short-lived, like many market tops, and a crypto winter gripped the market for all of 2018. After finding a bottom around January 2019, the crypto market cap had shed 80% of its value and fallen to just over $100 billion. In a similar fashion, Bitcoin lost more than three-quarters of its value. 

But by November 2021, those woes of 2018 were all but forgotten. In a matter of about two and a half years, the crypto asset class hit a new all-time high of around $2.8 trillion and Bitcoin reached more than $67,000. 

Crypto investors now find themselves in a similar situation to years past. Since that peak, the crypto market cap has lost more than half of its value, and Bitcoin is down nearly two-thirds from where it once was. 

The point is, crypto has been here and done that. Not just once, but three times. And each past decimation has been followed by a considerable rally. 

Lessons to be learned

Investors shouldn't act with certainty and think that just because it happened once, it will happen again, but they can use data to make informed decisions.

And the data shows that historically, investors have the most to gain when crypto and Bitcoin lose around two-thirds of their value.

In addition, the data shows that the return to new highs is not an overnight process. Nor will it happen in a year. It usually takes about two to three years before new highs are made. This isn't to give you a sense of false hope but rather serve as advice to keep a long-time horizon. 

Hindsight is always 20/20, but imagine if you invested at the absolute bottom of each one of these past bear markets.

A $1,000 investment in Bitcoin when it was worth just a few hundred dollars in 2015 would have been worth more than $90,000 by 2018. A similar $1,000 investment at the 2019 market bottom, when Bitcoin was worth just over $3,200, would have grown to around $20,000 by November 2021. 

Investors today need to keep a few things in mind when navigating these tumultuous times. First, maintain a broad time horizon. The true winners of this bear market will be the ones who plan on holding for at least three years and ideally even longer. 

Second, prioritizing cryptocurrencies with a solid track record is a proven strategy to minimize risk and maximize potential.

It isn't unheard of for a cryptocurrency to be here today and not make it to tomorrow. Investing in "blue chip" cryptocurrencies like Bitcoin and Ethereum is most recommended since they account for more than half of the value in the entire crypto market. 

Finally, consistency is key. Ensuring that you continue to gain exposure by investing regardless of the price is the best way to maximize your potential profits should prices return to new highs. Ignore the day-to-day and week-to-week price fluctuations.

Remember, bull markets make you money, but taking advantage of bear markets can make you rich. 

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

The post If cryptocurrency prices continue to plummet, what should you do? appeared first on The Motley Fool Australia.

What happened

Most cryptocurrencies and crypto stocks continued to plunge today as the industry deals with the fallout from the events in recent days that ultimately led the large crypto exchange FTX to agree to sell its non-U.S. operations to Binance.

Over the past 24 hours, shares of the world's second-largest cryptocurrency, Ethereum (CRYPTO: ETH), traded more than 24% lower as of noon today. Shares of the meme tokens Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE) traded more than 16% and 23% down, respectively.

So what

In recent days, there have been rumors questioning the solvency of FTX after a scathing report from the news website CoinDesk said that the crypto exchange's sister trading firm, Alameda Research, had a large number of its total assets in the cryptocurrency FTX Token (CRYPTO: FTT).

FTT is the in-house cryptocurrency created by FTX. The concern was what would happen to both Alameda and therefore FTX, because of how tied the two companies were, if the price of FTT fell. Furthermore, there were concerns about whether FTT was being used as collateral in any way. Not that it matters as much now, but the price of FTT is down more than 78% over the last 24 hours.

On the news of Alameda, Binance's CEO Changpeng Zhao announced that he would liquidate $2 billion of his FTT holdings, which started the concerns about FTT's price holding up and the impact on FTX and Alameda.

While FTX CEO Sam Bankman-Fried tried to calm these fears, taking to Twitter to say that FTX's balance sheet was sound, customers began to withdraw their funds from FTX; the crypto exchange said it saw $6 billion of withdrawals in 72 hours. This eventually led Bankman-Fried to turn to Zhao and sell FTX's non-U.S. operations to shore up the liquidity crunch the company was facing.

But the deal is pending due diligence, and there are already media reports, including one from CoinDesk citing anonymous sources, suggesting Binance might not end up going through with the deal. This whole series of events has shaken the faith in the entire crypto industry, similar to other big crypto meltdowns like that of algorithmic stablecoins.

"It shows that no one is too big to fail," Pascal Gauthier, CEO of crypto wallet firm Ledger, said on CNBC. "FTX seemed untouchable."

This also could hurt the resolve of the general public and reduce investing activity if people are skeptical about the large crypto exchanges and believe that they lack stability.

Now what

I don't know if the events over the last few days have affected my view of specific cryptocurrencies, but more so reflect the erratic nature of the industry as a whole and how it is still very much the Wild West.

FTX played an important role in the industry, so to see it go down so quickly -- and to realize some of the issues it likely had -- are going to raise a lot of questions.

Ultimately, my view hasn't changed on these three cryptocurrencies. I still like Ethereum at these levels and think the token has great long-term potential because of all of its real-world uses. The recent upgrades to the network should also greatly help Ethereum scale as well.

I am still not a fan of Dogecoin or Shiba Inu due to their lack of real-world utility and the lack of technical capabilities on each of their perspective networks.

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

The post Why Ethereum crashed today appeared first on The Motley Fool Australia.

What happened 

Cryptocurrencies didn't just wake up on the wrong side of the bed this morning; they had a terrible night. At 9:45 p.m. ET on Monday, the bottom fell out of the FTX Token (CRYPTO: FTT) and the race was on to sell everything in crypto. 

The worst of the decline was reserved for smaller cryptocurrencies, but as of 9:40 a.m. ET, Bitcoin (CRYPTO: BTC) has fallen 5.8% in the last 24 hours, Ethereum (CRYPTO: ETH) is down 7.5%, and Aptos (CRYPTO: APT) has dropped 13.3%. 

So what 

Drama has been building in the crypto space for about a week after CoinDesk reported that Sam Bankman-Fried's trading arm, Alameda Research, has $14.6 billion in assets and $8 billion in liabilities. That's not a problem in itself, but CoinDesk also said that $5.8 billion of the assets were the FTX Token, FTT. It's notable that Bankman-Fried also founded the FTX exchange, which is one of the top exchanges in cryptocurrencies.

Over the weekend, Binance CEO Changpeng Zhao announced that he would be selling nearly $500 million in FTX Tokens, causing speculation that their value would plummet. That's exactly what happened on Monday night, whether it was because of Binance's selling or traders anticipating the sale.

At the same time, customers are pulling money off of FTX's exchange, which could cause a "run on the bank". Nansen reported that FTX has had $1.2 billion worth of Ethereum and ERC-20 tokens withdrawn in the last 24 hours compared to $540 million in deposits. CryptoQuant says FTX's Bitcoin reserves were zero at one point.

Banks and exchanges typically don't keep enough reserves to pay all customers their money if they withdraw all at once, which is known as a run on the bank. This can cause panic selling and leave a company insolvent relatively quickly. 

Now what 

This is reminiscent of the summer collapse of Three Arrows Capital, which brought down Celsius Network and Voyager with it. Leverage that investors didn't know about on the balance sheet suddenly became problematic when crypto values fell and loans were called back. 

We're not sure this is what's happening at Alameda with the FTX Token, but given the price action and money moving out of FTX, investors are taking a cautious approach. 

It's not clear what happens next. FTX is still one of the largest exchanges, and if it fails, the impacts on crypto could be enormous. I wouldn't be surprised if this isn't the end of the decline in crypto prices, although that means a buying opportunity for long-term investors, because an exchange can go bankrupt, but a token can't.

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

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