Volatility strikes again for mainstream cryptocurrencies. The drop in crypto that began a week ago hit a low point very early Wednesday morning, but the industry has bounced back slightly since then.
According to Coinbase, Bitcoin (CRYPTO:BTC) fell to as low as $58,380 early this morning, but is now down just 0.64% in the past 24 hours to $60,191 as of 4:10 p.m. ET. Ethereum (CRYPTO:ETH) had a similar move, hitting a low around $4,068 late last night, and is now down just 0.15% to $4,249.
Meme coins have have recovered most of their losses as well. Dogecoin (CRYPTO:DOGE) was down as much as 4% today and is now down just 0.8% in the past 24 hours. Shiba Inu (CRYPTO:SHIB) was down 5% and is now off just 1.8%.
Within the world of cryptocurrencies, the news seems to be fairly positive. Bitcoin’s Taproot network upgrade was completed this past weekend and could open up features like smart contracts and more efficient transactions.
Bitcoin’s network mining power has also recovered 90% of its capacity from the lows in July, when China cracked down on miners. The U.S. is the biggest miner with 25% of the world’s capacity right now.
It seems that what we’re seeing this week in general is a pullback from all-time highs for most cryptocurrencies. Values spiked last week on news of high inflation combined with another stimulus package passing Congress. But this week we’ve seen the dollar strengthen and interest rates rise, so some of the inflation fear has eased.
This week may be bad from a crypto price standpoint, but taking a step back, we can see that crypto values are still up significantly in the past month.
Volatility is normal in cryptocurrencies; we’ve just seen more volatility than even hardened investors would probably like the past few weeks.
What I think investors should focus on long term is the growing utility in cryptocurrencies. Bitcoin bringing smart contracts to market is a great advance, and we have seen advances in utility for Ethereum and other cryptocurrencies as well. At the end of the day, unless real utility is added, there’s limited upside for crypto values.
We should also expect to see more volatility in the future. Cryptocurrencies still haven’t hit mainstream adoption yet, and it’s not entirely clear if the current valuations are a bubble or just the start for any given cryptocurrency. As the market figures out its answer, values will rise and fall sharply, sometimes on very little news. Today, the news seemed to be fairly positive, but the price trend was down and that’s to be expected in the volatile crypto world.
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