What happened

The two largest cryptocurrencies by market capitalization, Bitcoin (BTC -0.09%) and Ethereum (ETH -0.98%), have seen some significant selling pressure today. These two tokens are trading slightly above their daily lows but are down 3.8% and 4.6%, respectively, over the past 24 hours at 12:40 p.m. ET. 

Bitcoin's downside move appears to be related to higher trading volumes, as the active supply of Bitcoin surged to around 565,000 tokens. This increase in the number of Bitcoin being traded is the highest since the onset of the pandemic, suggesting more volatility could be on the horizon.

Volatile chart, with various ups and downs.

Image source: Getty Images.

For Ethereum, investors don't like seeing news that this token has been usurped as the second-most staked network by Terra over the past week. Ethereum's ecosystem size is seen as the defensive moat that underpins this token's high valuation.

Ripple's XRP (XRP -1.01%) token is also down, though slightly less than these two juggernauts, declining only 0.5% over the past 24 hours at 12:40 p.m. ET. This outperformance continues a recent trend with XRP, which has seen market-beating returns materialize as a result of speculation that Ripple's lawsuit with the Securities and Exchange Commission (SEC) could be wrapped up sometime in April.

So what

Bulls could make the case that more Bitcoin being traded, and the potential wrapping up of Ripple's lawsuit with the SEC, are positive catalysts. That certainly may be the case. That said, ongoing macro pressures appear to be factoring into investors' decision-making processes right now. These tokens will be interesting ones to watch in the coming days, to see if today's price action is simply a breather, or a signal that bearish momentum remains the common theme for 2022.

For Ethereum, concerns about just how insulated this network's ecosystem is relative to its peers are once again heating up. Various blockchain networks have stepped up their staking game, meaning more tokens locked into a given network results in lower supply and presumably a greater probability of price increases over the longer term. Ethereum's shift toward a proof-of-stake validation model is underway, though restraints via staking (the sheer number of ETH required to be staked on the Beacon chain) continues to push stakers to other tokens.

Now what

It's a volatile market right now, with uncertainty continuing to rear its ugly head for investors. As a higher-volatility sector, digital currencies have exacerbated what investors are seeing in the stock market. Accordingly, this asset class appears to remain reserved for investors with either aggressive risk tolerance thresholds or very strong risk management protocols in place.