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Why Are Bitcoin, Ethereum Prices Plunging Today?

  • Bitcoin (BTC-USD) and Ethereum (ETH-USD) fell below key technical levels.
  • Blockchain still lacks a “killer app” that would make it essential.
  • Forbes claims half of all crypto trades may be “wash trades” that increase volume but incur no risk.
Ethereum Prices - Why Are Bitcoin, Ethereum Prices Plunging Today?

Source: Marisha / Shutterstock.com

Cryptocurrencies like Bitcoin (BTC-USD) and Ethereum (ETH-USD) are supposed to act as stores of value like the U.S. dollar. But they trade like speculative tech stocks. Both Bitcoin and Ethereum prices fell below key levels over the weekend as traders digested Federal Reserve chairman Jerome Powell’s anti-inflation remarks at Jackson Hole, Wyoming.

Bitcoin is now trading below $20,000. Ethereum is trading below $1,500. The entire cryptocurrency market is now worth less than $1 trillion and could be headed lower.

Crypto Crash Continued

So far, the trade is orderly. So-called “stablecoins” meant to mimic the value of the dollar on a blockchain, like Tether (USDT-USD), USD Coin (USDC-USD) and Binance USD (BUSD-USD) are still trading at $1. Most negative action is on Bitcoin and Ethereum derivatives, such as Wrapped Bitcoin (WBTC-USD), Bitcoin Cash (BCH-USD) and Ethereum Classic (ETC-USD), which all have market caps below $5 billion. The Bitcoin market itself was worth $380 billion and Ethereum $177 billion early on Aug. 29.

The most frightening trend may be falling interest in cryptocurrency. Interest in both Bitcoin and Ethereum peaked in mid-June and has trended downward since.

Bulls in Bitcoin media continue to pump up crypto. While one trader called the Powell speech a “bunch of nothing,” most were revising their price targets down to as low as $16,000 per Bitcoin.

The market was also hit Aug. 26 by a Forbes report claiming half of all crypto trades are “wash trades,” which pump up volume but incur no risk. Wash trading is illegal under the Commodity Exchange Act.

What Happens Next for Bitcoin and Ethereum Prices

The biggest problem for crypto assets is they have no “killer app.” There is no blockchain application that can’t be handled by other means, often at lower cost.

Absent a compelling use case, you’re left with only speculation — a floating dice game that may be entertaining and may make some people money, but provides no economic value.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.


Article printed from InvestorPlace Media, https://investorplace.com/2022/08/why-are-bitcoin-ethereum-prices-plunging-today/.

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