The weekend continues to be a tough time for cryptocurrency holders. The stock exchange closes on Saturday and Sunday, but digital assets are traded 24 hours, 7 days a week and Saturday has repeatedly been a downturn for the cryptocurrency market in the last month.
There was a downturn in the cryptocurrency industry today, but a few were more remarkable than others. Ethereum (CRYPTO: ETH) the slide continues and fell 5.1% in the last 24 hours from kl. 16:20 ET. The value of Ethereum has fallen 17% in the last week and 31% in the last 30 days, reaching the dreaded $ 3000 price in afternoon trading today before recovering slightly.
Cardano (CRYPTO: NO) fell 5.5% in the last 24 hours, Shiba Inu (CRYPTO: SHIB) is down 5.9%, and Cosmos (CRYPTO: ATOM) is down 1[ads1]3.7 percent. These are all known as altcoins and are usually more volatile than their larger cryptocurrencies, but these are big falls no matter how you look at it.
The sharp fall in cryptocurrency values started around 11:00 ET and lasted for about two hours before stabilizing. Given the fact that it is the weekend and there is not much news and cryptocurrencies were sold across the board, this looks like a short-term trading phenomenon.
One factor to look at is the number of accounts for trading digital assets that are liquidated due to hitting margin limits, which is another way of saying that a stock exchange forced a cryptocurrency holder to sell to ensure that debt is repaid. According to Coinglass.com, $ 273 million of cryptocurrencies they follow were liquidated in the last 24 hours. Surprisingly, $ 71.9 million of this was in Ethereum with only $ 53.6 million in Bitcoin (CRYPTO: BTC) although Bitcoin has a much greater market value. These forced sales may be the reason why Ethereum fell so much, and related cryptocurrencies that also build utility followed.
Liquidation data can tell us a lot about the short-term movements of cryptocurrencies. For example, on December 2 and 3, 2021, $ 636 million and $ 1.58 billion of long-term positions (a position that is profitable if the price of an asset goes up) were liquidated, causing the market to fall. Today, only $ 211 million of positions have been liquidated so far, but over the past three days, $ 1.24 billion in long positions have been liquidated, so there is definitely downward pressure.
All investment markets are trying to work through confusing economic data right now as well. Omicron is sweeping the world, potentially having a negative impact on the economy. We also see inflation and the US Federal Reserve talking about raising interest rates in 2022, which could also slow down the economy. This fear has hurt growth stocks recently, and cryptocurrencies are generally correlated with growth stocks, so they are also falling.
Volatility is common in cryptocurrencies, but in most of the last two years the price trend has risen. Now we see volatility work against investors and prices are falling rapidly.
The fall may last for a while as speculators and traders with mortgages are pushed out of the market. But hundreds of millions of dollars are invested in building real benefits for cryptocurrencies, whether in finance, fashion, payments or other areas, and in the long run that is why I am positive about the industry. That said, it’s going to be a bumpy ride, and I’m prepared for prices to drop further before getting better.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We are motley! Asking questions about an investment task – even one of our own – helps us all think critically about investments and make decisions that help us become smarter, happier and richer.