The cryptocurrency market had another bad day on Monday, continuing its general trend from the past couple of months. Almost every major coin was down in trading, including altcoins, following a rough weekend for most valuations.
As of 12:30 p.m. ET, Binance Coin (CRYPTO:BNB) had been down by as much as 6.8% and was off by 3.5%. Cardano (CRYPTO:ADA) had been down by as much as 10.7% and was off 5.7%, while Polkadot (CRYPTO:DOT) had plunged by as much as 11% and was at that point down by 7.1%. Finally, Solana (CRYPTO:SOL) had been down by as much as 9.9% before recovering slightly, and was at that point off by 6.2% over the previous 24 hours.
The biggest story is still the market overall. The S&P 500 is down 1.4% as I'm writing but the Nasdaq Composite has fallen 2%, and for high-volatility assets like cryptocurrencies, the declines are magnified. Growth stocks are seeing large declines as well, and cryptocurrencies have recently moved somewhat in tandem with those. While growth stocks and cryptocurrencies were big winners when the broad market was on its way up, they're losing big now that the market is going down.
But there are two notable news items Monday that are affecting asset prices, and cryptocurrencies specifically. The first is that interest rates are continuing to rise after the Federal Reserve said it plans to start reducing the size of its balance sheet in 2022. The 10-year Treasury rate rose by 1 basis point Monday to 1.78% and is up by 29 basis points over the last month. By historical standards, that's still a very low interest rate for those Treasury bills, but rising rates tend to push down the value of riskier assets, which helps explain why crypto is falling.
Making matters worse is the fact that omicron is spreading rapidly around the world, which could impact the global economy and financial liquidity. According to worldometers.com, there were nearly 3 million new COVID-19 cases globally on Sunday, more than three times as many as the highest daily peak during any previous wave of this pandemic. In the U.S., there have been an average of over 600,000 new cases daily over the last week. Even if the economic impacts of this coronavirus wave turn out not to be as intense as those we experienced earlier in the pandemic, this kind of news can send growth stocks tumbling.
The one crypto-specific news item is that, due to an as-yet unexplained glitch, Coinbase account holders reportedly lost the ability to send or receive Cardano tokens over the weekend. Coinbase hasn't said why these issue is happening, but it's not a good look for the biggest cryptocurrency exchange to be having problems of this nature.
While the big moves in cryptocurrencies can be concerning, I don't see any major reason to panic. Token values are falling along with the market and other high-risk/high-volatility assets, which shouldn't be all that surprising. The one thing we can bet on is that wide swings will continue to be a feature of the crypto market.