Trading took a turn for the worse in the middle of the holiday weekend for the cryptocurrency market and most values are down. There wasn't a lot of news, but the liquidity may be little lower than normal on a long holiday weekend, causing values to fluctuate wildly.
The value of Bitcoin (BTC -0.02%) is down 4.4% in the last 24 hours as of 3:20 p.m. ET on Sunday while Ethereum (ETH -0.18%) has fallen 4.2%, and Dogecoin (DOGE -0.16%) is down 2.6%. The market started turning at about 8:00 p.m. ET on Saturday night and cratered until 4:00 a.m. ET on Sunday morning.
Values started to fall on Saturday after UK Prime Minister Boris Johnson said financial sanctions on Russian firms should escalate. And the U.S. seems to be agreeing because Johnson said firms won't be able to trade in "pounds and dollars". Increasing tension around the conflict between Russia and Ukraine has affected the market as a whole in the last few weeks, and with crypto trading 24/7 this is the first place for investors to react.
It didn't help that Ethereum's largest NFT trading marketplace Opensea had a hack or phishing attack, depending on who you ask, that drained hundreds of thousands of dollars from customers' crypto wallets. The situation is ongoing but it's another black eye for some of the industry's most visible projects.
According to coinglass.com, the drop in crypto values led to $208 million in liquidations over the last 24 hours. Bitcoin was the most affected with $80.3 million in liquidations followed by Ethereum at $54.9 million.
The volatility in cryptocurrencies has been high on weekends in part because traders are taking time away from the market. And this is a holiday weekend in the U.S., so there may be more absences than normal, increasing the volatility even more.
What I think we're broadly seeing is investors selling risky assets as fears of conflict erupt in Eastern Europe and cryptocurrency is the first place from which they can pull money. While an armed conflict doesn't seem to be particularly likely, outside of financial sanctions, markets don't like any kind of uncertainty.
Volatility will continue for cryptocurrencies short-term, but the long-term picture remains the same. Investors should be watching for utility being built on top of blockchain technologies because that's where the real value will be added long-term. Ethereum is the leader out of these three, which is why it would be my pick to buy on this dip, but like all cryptocurrencies, it will be volatile with the market overall.