Cryptocurrency bulls everywhere are hurting today as seemingly the entire asset class is in the midst of a brutal pullback. Indeed, 94 of the largest 100 cryptos by market capitalization are down today as the crypto crash continues to make waves.
So, what’s behind this massive crypto crash?
Today’s drop is likely in response to uncertain market conditions, amplified by an upcoming Capitol Hill announcement. As per Bloomberg, President Joe Biden’s administration is preparing a piece of regulatory legislation for the largely unmonitored crypto markets. According to the article, “The late-stage draft of the executive order details economic, regulatory, and national security challenges posed by cryptocurrencies. … It would call for reports from various agencies due in the second half of 2022.”
This comes just days after officials from Russia’s central bank proposed banning the use and mining of cryptocurrencies, claiming it’s a threat to financial stability. The crypto horizon seems ripe with confusion, and rightfully so. Indeed, 2022 could prove a volatile year for the alternative asset as governments worldwide establish policies centered around the crypto phenomenon.
What else is bringing down cryptos lately?
Crypto Crash Reaches New Lows Amid Economic Confusion
Markets everywhere have been speculative ahead of impending interest rate hikes, made to combat record levels of inflation. As is historical precedence, fear of a downturn can often spur a market descent in its own right.
Ethereum (CCC:ETH-USD) is down more than 8% today, joining other popular coins like Cardano (CCC:ADA-USD), which is down 9%, and Solana (CCC:SOL-USD), which is down nearly 14%. Even meme-coin darlings like Dogecoin (CCC:DOGE-USD) couldn’t avoid the cold streak; DOGE is down 6%. Bitcoin (CCC:BTC-USD) and Ethereum, the top dogs of the crypto world, have lost more than 40% of their value since November as the entire crypto market shed more than $1 trillion.
To be fair, cryptos aren’t the only ones hurting. The S&P 500 is down nearly 3% today, on track to lose more than a 10th of its value this month alone.
2021 was a booming year across nearly all sectors and asset classes. Many cryptos saw their highest levels ever in Q4 of last year. However, heading further into the new year, the party may be over.
On the date of publication, Shrey Dua did not hold (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.