Why Is Crypto Crashing Today?

  • Concerns around a potential crypto crash are building, with many top tokens down considerably today.
  • At the time of writing, Bitcoin (BTC-USD) is down more than 9% over the past day as investor sentiment sours on risk assets.
  • Here are a few factors that could be leading to today’s decline in many crypto assets today.
why is crypto crashing - Why Is Crypto Crashing Today?

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Equities and other risk assets have had a wild and wacky start to the morning. In the world of cryptocurrency, some rather steep declines are also being seen in today’s session. Accordingly, the question “Why is crypto crashing today?” is much more widespread than usual.

After all, the crypto sector as a whole has held up relatively well over the past year as investors continue to view digital assets such as Bitcoin (BTC-USD) as stores of value. With a halving now past us and spot Bitcoin exchange-traded funds (ETFs) approved — as well as similar ETFs for Ethereum (ETH-USD) — there are plenty of catalysts to point to as reasons to hold these large-cap cryptos moving forward.

Unfortunately, Bitcoin is down more than 9% over the past 24 hours at the time of writing, and Ethereum and other tokens are also sinking quickly in today’s session. Let’s dive into what’s behind these stark moves in these top tokens and the broader crypto sector right now.

Why Is Crypto Crashing?

Most investors are well aware that digital assets are among the most speculative and highest-risk investments. In bull markets, this means the gains an investor can potentially see could be much greater than those seen in the stock or real estate markets, for example.

But on days like today, when all major indices are down significantly (and Japan’s Nikkei 225 dropped more than 12% overnight), digital assets are bound to have a bad day as well. That’s the way high beta investing typically goes, for better or worse.

Concerns have begun to build around the potential for a global recession following weak jobs numbers in the U.S. and a lack of willingness from the Federal Reserve to cut interest rates. The subsequent pressure an artificially strong U.S. dollar creates on other economies could lead to downturns across the globe, and these concerns appear to have been exacerbated by already high valuation multiples in most sectors of the economy, particularly in tech and AI-related names.

With crypto assets likely to continue following higher-risk equities for the time being, the question is whether this crash will end shortly and reverse or if more downside is likely from here. I think we’ll have to wait and see, at least for now.

On the date of publication, Chris MacDonald 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.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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