What happened 

The crypto market sell-off continues Wednesday as a strong dollar hurts valuations and some negative news impacts trading. This is normal volatility, but right now it's a negative for valuations. 

At 10:30 a.m. ET, Ethereum Classic (ETC 1.63%) was down 11.6% in the last 24 hours, Celsius (CEL) had fallen 11%, and Aave (AAVE -0.28%) was down 7.3%. Values quickly recovered, though, and at 2 p.m. ET all of these cryptocurrencies had clawed back some gains, with Aave trading slightly higher over the last day. 

So what 

The U.S. Dollar Index has risen steadily all week, reaching nearly 111 early on Wednesday. Naturally, assets that are priced in dollars will fall in relative value. The index fell sharply midday, which may have helped crypto values stabilize. 

Celsius continues to come under pressure and Vermont regulators said the company looked like a Ponzi scheme at times. The bankrupt company is being investigated by multiple states and multiple countries, which doesn't bode well for its business even when it exits bankruptcy. The CEL token relies on lending on Celsius Network to provide value, so more pressure from regulators isn't good news for the token. 

Aave also announced that it will pause lending until after Ethereum's Merge takes place. This may be taking a little liquidity out of the market, increasing volatility. 

Another pressure point is crypto lender Voyager announcing it will auction off assets on Sept. 13. That will put more crypto assets into an already illiquid market, which could push prices even lower. If Celsius does the same thing later this year or next year, there could be even more selling pressure. 

Now what 

Today's move has a number of factors working against investors. There's a level of "buy the rumor, sell the news" ahead of Ethereum's Merge, which is pushing Ethereum and many crypto tokens lower. And the strong dollar isn't helping valuations either. 

Liquidations of bankrupt companies like Voyager and Celsius could continue to wreak havoc on the market. Right now, the pressure from these assets hitting the market could push values lower simply because buyers aren't there to absorb the selling. 

While these moves are meaningful to a portfolio, I don't think they're a reason to change your investment thesis right now. The crypto winter has reduced trading and development activity across the industry, but companies are still being built on the blockchain. That's what will drive value eventually as innovations hit the market and cryptocurrencies become the medium of exchange in a digital world. That trend isn't stopping because a bankrupt company is selling assets, although it will impact valuations short-term.