Bulls can’t run forever. There’s always a refueling stop, a place for assets to regroup before hopefully making another charge upward. Crypto is no different; cryptocurrency fanatics witness flash crashes and bear markets multiple times a year, thanks to the market’s boom-and-bust cycle. This week, it looks like digital currencies are falling into a correction. With the month’s impressive soaring, investors are wondering, “Why is crypto crashing today?”
Bitcoin (CCC:BTC-USD), Ethereum (CCC:ETH-USD), Cardano (CCC:ADA-USD) — these are the biggest names in digital currency today. The three have a market capitalization far higher than any other asset in the market; in fact, Bitcoin’s market share makes up around half of the total crypto market. But, these high values don’t make the crypto plays immune to volatility. On the contrary, they help to create the volatility.
Cryptos are hugely reliant on Bitcoin momentum to create gains. Due to its massive size, Bitcoin is the litmus test for the state of the whole market. As such, an event that disrupts Bitcoin can disrupt every other coin. Recently, this test has proven itself after the flash crash following El Salvador’s adoption of Bitcoin as legal tender. While some investors sold the news for a profit, others holding Bitcoin and a litany of altcoins saw their wallets sharply drop in value.
Crypto Is Crashing Today, but Bulls Are Buying the Dip
Today’s crypto woes once again largely stem from Bitcoin. The crypto surged over $20,000 since late July in an effort to reach the same highs above $60,000 it saw earlier in the year. Recently, it came close to the $50,000 mark, and lots of bullish sentiment had built around Bitcoin’s return to form. Over the weekend, however, Bitcoin refused multiple times to cross the $50,000 threshold. This is prompting some to take profits and flee, thus lighting the fuse of a big crypto selloff.
Bitcoin is dropping 7.5% as a result of the big sell. Of course, this is prompting a flash crash due to Bitcoin’s market influence. Ethereum is dropping nearly 9%, as is Cardano. Meanwhile, Binance Coin (CCC:BNB-USD) is down nearly 10%. Nearly every coin of the top cryptos by market capitalization are trading down this morning.
Of course, crypto bulls are not concerned with crypto crashing today. Rather, they are rallying others to buy the dip, prompting a #buythedip trend on Twitter. Thousands of posts on the platform are calling for crypto holders to deepen their wallets with this buying opportunity.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.