Why Bitcoin, Ethereum, and XRP are struggling today

Choppiness in the crypto market continues, hitting these three top tokens.

| More on:
a close up of a woman's face looks skywards as she is showered in a sea of graphic symbols of gold and silver coins bearing the bitcoin logo.

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

It's been a rather bumpy ride in the world of large-cap cryptocurrencies of late. Today, this volatility has continued, with Bitcoin (CRYPTO: BTC)Ethereum (CRYPTO: ETH), and XRP (CRYPTO: XRP) each seeing declines as of late-morning trading.

At 11:45 a.m. ET, these top tokens had sunk 1.3%, 2.1%, and 5.1% respectively over the past 24 hours. 

A number of macro factors appear to be weighing on these top tokens, including volatility in Asian markets as well as concerns around rising interest rates and a stronger U.S. dollar. 

For Bitcoin, these concerns have overshadowed some near-term catalysts investors are focused on. The Central African Republic has passed a bill to regulate crypto, adopting Bitcoin and other cryptocurrencies with a focus on inclusive growth. While this news isn't necessarily as bullish as El Salvador's move to declare Bitcoin legal tender, investors are taking note. 

Similarly, Ethereum's move toward an eventual "merge" that would take it from proof-of-work validation to proof-of-stake validation continues to provide both bullish anticipation and anxiety for some investors. That's because Ethereum's merge has been delayed, again, signaling any sort of bullish catalyst for investors may be further out. 

XRP has now given up most of its gains from its late-January dip, as investors appear to be cautious with respect to the upcoming verdict on the SEC v. Ripple case that's nearing a close.

So what

Each of these top tokens has its own idiosyncratic catalysts and headwinds investors ought to consider. That said, the price action in today's crypto market has really been mostly to the downside, with the exception of certain meme tokens (thanks to Elon Musk).

Like equity investors, those in the crypto market appear to be pricing in continued headwinds from lower liquidity in the market stemming from rising interest rates and quantitative tightening. Expectations that growth assets may underperform, whether true or not, are overshadowing any bullish catalysts for these top tokens once again today.

Now what

It's unclear whether the highly discussed crypto winter many were talking about at the beginning of the year is truly over. Right now, it's clear that an unfavorable monetary policy environment is likely to continue to affect the valuations of riskier assets for some time. Being among the riskiest of all asset classes, cryptocurrencies may be ill-positioned for growth in such an environment.

That said, there are many reasons long-term growth investors may remain bullish on cryptocurrencies. The technologies underpinning these tokens do provide tangible catalysts for investors to get excited about. Accordingly, it's now a question of how the market will price this growth potential. Today, it appears most investors are negative on the near-to-medium-term outlook for this sector.

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

Chris MacDonald owns Ethereum. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns 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 Bruce Jackson.

More on International Stock News

Four investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces.
Economy

Up 20% this year. Does the S&P 500 Index have more in the tank for 2024?

Will US stocks hold up after the election?

Read more »

two young boys dressed in business suits and wearing spectacles look at each other in rapture with wide open mouths and holding large fans of banknotes with other banknotes, coins and a piggybank on the table in front of them and a bag of cash at the side.
International Stock News

2 magnificent S&P 500 dividend stocks down 27% to 51% to buy and hold forever

These stocks hold potential to act as growth and income plays.

Read more »

A young female investor with brown curly hair and wearing a yellow top and glasses sits at her desk using her calculator to work out how much her ASX dividend shares will pay this year
International Stock News

One Wall Street analyst thinks this emerging Artificial Intelligence stock could rise 60% in the next year

SoundHound AI is on the doorstep of a big year.

Read more »

man looks up at apple on his head
International Stock News

Why did Warren Buffett sell more Apple shares?

Does Buffett know something we don't?

Read more »

A male party goer sits wearing a party hat and with a party blower in his mouth amid a bunch of balloons with a sad, serious look on his face as though the party is over or a celebration has fallen flat.
International Stock News

What snapped the S&P 500 winning streak last night?

The S&P 500 almost made October a winner, but fell at the final hurdle.

Read more »

Man going down a red arrow, symbolising a sliding share price.
International Stock News

Why Nvidia stock is sinking today

Investors were spooked by economic data and the ambitions of a deep-pocketed rival.

Read more »

Rede arrow on a stock market chart going down.
International Stock News

Why Microsoft stock is sinking today

Microsoft just beat quarterly earnings estimates. So why is the stock falling?

Read more »

US economy and sharemarket with piggy bank
Share Market News

Here's why Goldman Sachs sees a decade of lower returns ahead for US shares

Aussie investors have placed a lot of faith in US shares this year.

Read more »