The cryptocurrency market crashed in today’s trading. Chain link (CRYPTO:LINK), Coin Crypto.com (CRYPTO:CRO), Rippleit is (CRYPTO:XRP) XRP token, and Algorand (CRYPTO:ALGO) were down 14.6%, 16.6%, 13.2% and 13.9%, respectively, in the previous 24-hour period as of 5:30 p.m. ET Friday. During this time, Bitcoin fell 11.2% and EthereumThe ether token was down 15.5%, and the big selloffs quickly slashed the value of the combined total cryptocurrency market by more than $200 billion.
Russia’s central bank shared a document on Thursday outlining a proposed ban on all cryptocurrencies, and the adverse news came at a time when the market was already exiting risky bets. With macroeconomic headwinds, including rising interest rates and Treasury bond yields, creating a more challenging backdrop for the crypto market, investors were already nervous, and it also looks like corporate performance, especially Platoon and netflix takes into account the recent sale.
As of this writing, and excluding stablecoins, there was not a single cryptocurrency in the top 40 that was positive during the previous trading day. Most tokens in the category were actually down double digits. Investors have recently moved away from cryptocurrencies and high-risk stocks, and today’s moves suggest the trend may be accelerating.
The document released yesterday by the Bank of Russia outlined the potential changes for cryptocurrencies in the country. Russia already has restrictions in place on the use of crypto tokens to purchase goods and services, but the new proposal potentially calls for bans on cryptocurrency trading and mining.
In addition to this negative catalyst, it seems that the underperformance of some large US-based companies is also having a ripple effect on the crypto market. Although the connection may seem tertiary, the disappointing results of some key consumer products and services companies seem to be a factor in the sale of cryptocurrency. News recently broke that exercise equipment and services company Peloton was planning to lay off 41% of its sales and marketing staff and halt production amid rising inventory, and it was followed. of a fourth-quarter report from Netflix that fell well short of expectations and crushed the streaming executive’s appreciation.
If that wasn’t enough, Crypto.com Coin holders also had to contend with a network-specific catalyst causing sales. The organization released an update yesterday announcing that 483 users of its platform had lost a combined total of nearly $34 million in assets due to a security breach.
Between rising inflation, the Fed’s plans to raise interest rates, and potentially economic data, there are a host of factors that have recently prompted a sell-off in high-risk investments. The market has been anticipating fourth-quarter earnings reports as a key indicator, and relatively disappointing performance from some big names helped spark risk sentiment on Friday that spilled over into the crypto market. At this point, it seems reasonable to think that more disappointing fourth quarter numbers for growth-reliant companies could create additional valuation turbulence for the crypto.
In recent months, cryptocurrencies have hardly been immune to macroeconomic pressures and changing investor risk tolerance. If investors continue to become more risk averse, cryptocurrencies could experience a more prolonged downtrend. Digital tokens are sometimes touted as a safe haven from macro volatility, but trading in recent months now appears to be testing that contention, and investors should be prepared for greater near-term volatility.
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