Cryptocurrency investors woke up to a down market on Monday, which just happens to also be tax day in the U.S. In a volatile market like crypto, it seems like every day is either up or down big and today the sellers are winning.
Bitcoin (BTC 0.06%) had fallen as much as 4.1% as of noon ET, while Ethereum (ETH 0.44%) dropped up to 5.8%, Dogecoin (DOGE 0.36%) fell 6.9%, and Shiba Inu (SHIB -0.27%) fell up to 8%. The selling was widespread so there's no reason to be especially worried about any particular cryptocurrency.
It's hard to ignore that today is tax day in the U.S. Crypto traders may be selling in order to pay taxes due, which can be surprising if this is your first time paying taxes on large trading gains.
Over the weekend there was also news of a $182 million hack of the Beanstalk protocol, a stablecoin credit protocol built on Ethereum. This continues a series of hacks of cryptocurrencies across the industry, which undermines investor confidence in the ecosystem. This is an industrywide problem and it doesn't seem that there's a great solution right now.
The stock market overall is down today as well and that has generally meant that more volatile cryptocurrencies will magnify those losses.
Volatility is the name of the game in cryptocurrency and that doesn't seem to be changing anytime soon. Search the internet and you can find analysts and investors who are afraid of inflation, or regulation, or hacking, while others are bullish for reasons that range from innovation to crypto being an inflation hedge.
For today, I don't see anything to be worried about in any of these cryptocurrencies. Given the trends of the industry, I think Ethereum is the best bet given the real utility that can be built in the ecosystem and the projects being built there already. Bitcoin, Dogecoin, and Shiba Inu simply can't claim the same kind of digital ecosystem.
If today's selling is indeed due to tax season or the down stock market this could be a good buying opportunity for investors. Nothing has fundamentally changed about crypto today and we're seeing the industry build more and more applications every day. We are also likely to get some regulatory updates in the U.S. and Europe this year, which could be a boost to the industry's development long-term.
When I see moves like this today I tend to brush them off because nothing about cryptocurrencies is fundamentally different than a day ago. It's just that current portfolios are a little lower for the time being.