What happened
Cryptocurrencies sold off over the weekend, with Bitcoin (BTC +1.46%) in particular breaking below $50,000 after trading as high as $68,000 less than a month ago -- a 30% drop in under 30 days.
As Monday morning trading opens, Bitcoin prices are down 10.5% over the past 24 hours as of 9:45 a.m. ET -- and it's not even the crypto being hit hardest. Cardano (ADA +0.91%) coins are down 18.2%, and Fantom (FTM 5.16%) bears the dubious distinction of being the hardest hit crypto of the bunch -- down 31.4%, according to data from CryptoCompare.com.
Image source: Getty Images.
So what
What's rocking the crypto world today? Market analysts (Time, for example) blame the sell-off primarily on worries that as the Federal Reserve tapers its purchases of bonds, this will shut off the spigot of money that's been inflating risky assets such as cryptocurrencies, and cause prices to fall -- but there are other factors at work as well.
Securities and Exchange Commission Chairman Gary Gensler warned investors again last week about "fraud, scams, and abuse ... hype and spin about crypto assets and crypto projects," calling for more "investor protection," and declaring: "Make no mistake: If a lending platform is offering securities, it also falls into SEC jurisdiction." On top of that, the president's signing of a $1.2 trillion infrastructure bill codified into law new plans to tax cryptocurrency transactions.
And of course, there's the omicron variant of the coronavirus that's on everyone's mind these days.
Now what
Topping off this parade of horrors were comments from famed investor Louis Navellier, who recently pointed back to the tapering trend and warned that "the Fed is tapering, and this should create a correction in risk assets, of which bitcoin is a part."
Navellier predicted that Bitcoin prices could easily fall as much as 80% from their recent high (i.e., fall to $13,700) -- or even fall further, as low as $10,000. And other cryptocurrencies could fall even harder. As Forbes pointed out over the weekend in a story on Navellier's doomsday prognosis, "smaller cryptocurrencies remain highly volatile ... often bouncing double-digit percentages in mere hours."
And now we've seen them drop double-digit percentages in mere hours. The fact that Navellier's warning is playing out as predicted, and so soon after being predicted, is clearly contributing to investor unease today.
