The explosion of cryptocurrency prices seems to have come to an abrupt halt late on Monday night as a broad crypto sell-off commenced. As of 11 a.m. EST on Tuesday, every major cryptocurrency was down big, with some trading 10% lower in the past 24 hours.
Bitcoin (CRYPTO:BTC) is the biggest and most notable move in the world of cryptocurrency, falling 5.8% in the past 24 hours. After peaking at about $69,000 last week, the value of a Bitcoin fell below $59,000 briefly early Tuesday morning.
Ethereum (CRYPTO:ETH) is down 8% in the past day, falling over 10% briefly this morning. It's down 10.8% in the past week. Solana (CRYPTO:SOL) is down 6% in the past 24 hours and has fallen 9.1% in the past week. Dogecoin (CRYPTO:DOGE), which is the king of meme coins, is down 6.5% in a day and 14.5% in the past week.
There's no single factor causing cryptocurrencies to fall right now, but there's a convergence of items that are adding together.
The first is that China continues to be intent on eliminating crypto mining from the country. Officials from the National Development and Reform Commission said in a press conference today that they will continue to crack down on mining, which likely means that one of the world's largest economies is rejecting cryptocurrency outright.
We are also seeing the dollar strengthen versus other fiat currencies, and it appears to be strengthening versus cryptocurrencies as well. The dollar is strengthening in part because interest rates are rising, which could help slow inflation. But if investors own Bitcoin or another cryptocurrency as a hedge against inflation, rising rates and a rising dollar could cause them to unwind that trade.
We are also likely seeing a natural pullback in cryptocurrency values, which have run up over the past few weeks. You can see below that, since the start of September, Bitcoin, Ethereum, and Solana have been on fire, while meme coin Dogecoin seems to have lost its luster.
Volatility is commonplace in cryptocurrencies, and for weeks the volatility has worked in investors' favor. Over the past 24 hours, we've simply seen that dynamic flip. There isn't an issue with any specific cryptocurrency, but rather a trade out of crypto altogether.
This is where investors with a long-term view of the cryptocurrency industry should stay focused on why they're bullish on crypto and not just price movements. Nothing about the industry has fundamentally changed today, except prices are down versus the U.S. dollar, which is normal volatility for cryptocurrencies today.