Why Ethereum, Dogecoin, and Solana lost altitude on Thursday

These three large-cap tokens are feeling the effects of leverage in the crypto market today.

| More on:
Rede arrow on a stock market chart going down.

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

Today's rather bumpy price action in the stock market is reverberating through cryptocurrencies once again. As of noon ET, Ethereum (CRYPTO: ETH)Dogecoin (CRYPTO: DOGE), and Solana (CRYPTO: SOL) declined 1.8%, 1.6% and 3.6%, respectively, over the past 24 hours.

Today's price action appears to be driven by increased concerns around higher interest rates, as shorter-dated bond yields hover around levels not seen since 2007, which was prior to the Great Recession. For these major cryptocurrencies, which have continued to trade in historically high correlation to equities, the pain is being felt across the sector. Additionally, record-high levels of open interest leverage have exacerbated the volatility with which cryptos move relative to equities.     

So what

Ethereum, Dogecoin, and Solana are among the most-traded cryptos and continue to garner significant attention from investors looking for signals of where the overall crypto market could be headed. Ethereum, the world's second-largest cryptocurrency, has seen meaningful volatility over the past month, as investors price in the network's upcoming The Merge, which will result in Ethereum shifting to a more energy-efficient proof-of-stake blockchain network.

Notably, Ethereum has recently seen its perpetual futures open interest hit an all-time high ahead of this big catalyst. Investors looking to put on leveraged derivatives trades are doing so en masse, increasing the likelihood of forced liquidations, which can create more volatility in the short term. While Dogecoin and Solana see significant interest from derivatives traders, Ethereum's massive volume is indicative of this token's status in the crypto market.

Now what

Crypto has historically been a more speculative asset class than equities, though driven by many of the same macro forces. Higher interest rates provide a headwind that will likely continue to affect both asset classes moving forward. 

That said, the prevalence of leverage in the crypto market could accelerate moves higher or lower in the near term. Thus, investors concerned about short-term volatility may be sitting this ride out. That's fair, considering the moves we've seen this year.

However, long-term investors may look at these outsized moves as potential buying opportunities, should one consider a bottoming process at some point soon. While it may be too soon to tell when the crypto market will start to turn higher, these levels are becoming increasingly enticing for those with a long investing time horizon.   

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

Should you invest $1,000 in Ava Risk Group right now?

Before you buy Ava Risk Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Ava Risk Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Chris MacDonald has positions in Ethereum and Solana. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum, and Solana. The Motley Fool Australia owns and has recommended Ethereum and Solana. 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

A woman looks questioning as she puts a coin into a piggy bank.
International Stock News

Is Warren Buffett's Berkshire Hathaway the smartest investment you can make today?

So, with all the uncertainty, is Berkshire Hathaway the smartest investment you can make today?

Read more »

Warren Buffet
International Stock News

7 ways Warren Buffett changed my investing approach

I'm a big fan of Warren Buffett, and have been for many years.

Read more »

iPhone with the logo and the word Google spelt multiple times in the background.
International Stock News

Down 12% this year, should you buy Alphabet stock?

The Google owner is underperforming the Nasdaq Composite, which has rallied in recent weeks.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
International Stock News

Missed out on Apple in 2012? Buying Nvidia stock today could be your second chance

By now, it's clear that artificial intelligence (AI) is the next major technology platform.

Read more »

Robot humanoid using artificial intelligence on a laptop.
International Stock News

3 reasons Amazon stock looks like an incredible bargain right now

Here are three reasons Amazon stock looks like a rare bargain at current levels.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Warren Buffett's $347 billion warning to Wall Street is ringing out loud and clear. History says this happens next.

Let's take a look.

Read more »

Warren Buffet
International Stock News

Warren Buffett nearly made his biggest investment since 2022. Here's what's holding him back.

Buffett said Berkshire came close to spending $10 billion, and he'd happily spend $100 billion.

Read more »

Happy man working on his laptop.
International Stock News

Here's why Amazon is a brilliant buy now (Hint: It's not e-commerce)

Fortunately for investors, cloud computing is going through a massive boom.

Read more »