WHY ARE BITCOIN AND OTHER CRYPTOCURRENCIES CRASHING?
As for why Bitcoin and other major cryptocurrencies are dropping this morning, that’s a little harder to pinpoint for certain. However, one possible reason may be down to profit-taking. Some investors may have been alarmed by the losses in the traditional markets last week, so they are extracting their gains from their crypto investments now to help offset those losses.
Another possibility, as CNBC notes, is that if we are headed for a worsening economy and a possible recession, investors may want to get out of riskier assets before the worst of the troubles hit. The price of cryptocurrencies is historically much more volatile than stocks. And volatility equals risk, which is something investors have a reduced appetite for when the economy weakens.
Of course, for Bitcoin, it isn’t all bad news. While the 15% drop in the cryptocurrency over the past 24 hours won’t make investors happy, the world’s leading crypto is still up over 23% year-to-date.
The same optimistic assertion can’t be said for Ethereum, however. That coin’s 22% drop in the past 24 hours has wiped out all the gains it had made this year so far.
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