It's been a rather bumpy ride in the world of large-cap cryptocurrencies of late. Today, this volatility has continued, with Bitcoin (BTC 1.31%), Ethereum (ETH 0.28%), and XRP (XRP 0.70%) each seeing declines as of late-morning trading.
At 11:45 a.m. ET, these top tokens had sunk 1.3%, 2.1%, and 5.1% respectively over the past 24 hours.
A number of macro factors appear to be weighing on these top tokens, including volatility in Asian markets as well as concerns around rising interest rates and a stronger U.S. dollar.
For Bitcoin, these concerns have overshadowed some near-term catalysts investors are focused on. The Central African Republic has passed a bill to regulate crypto, adopting Bitcoin and other cryptocurrencies with a focus on inclusive growth. While this news isn't necessarily as bullish as El Salvador's move to declare Bitcoin legal tender, investors are taking note.
Similarly, Ethereum's move toward an eventual "merge" that would take it from proof-of-work validation to proof-of-stake validation continues to provide both bullish anticipation and anxiety for some investors. That's because Ethereum's merge has been delayed, again, signaling any sort of bullish catalyst for investors may be further out.
XRP has now given up most of its gains from its late-January dip, as investors appear to be cautious with respect to the upcoming verdict on the SEC v. Ripple case that's nearing a close.
Each of these top tokens has its own idiosyncratic catalysts and headwinds investors ought to consider. That said, the price action in today's crypto market has really been mostly to the downside, with the exception of certain meme tokens (thanks to Elon Musk).
Like equity investors, those in the crypto market appear to be pricing in continued headwinds from lower liquidity in the market stemming from rising interest rates and quantitative tightening. Expectations that growth assets may underperform, whether true or not, are overshadowing any bullish catalysts for these top tokens once again today.
It's unclear whether the highly discussed crypto winter many were talking about at the beginning of the year is truly over. Right now, it's clear that an unfavorable monetary policy environment is likely to continue to affect the valuations of riskier assets for some time. Being among the riskiest of all asset classes, cryptocurrencies may be ill positioned for growth in such an environment.
That said, there are many reasons long-term growth investors may remain bullish on cryptocurrencies. The technologies underpinning these tokens do provide tangible catalysts for investors to get excited about. Accordingly, it's now a question of how the market will price this growth potential. Today, it appears most investors are negative on the near-to-medium-term outlook for this sector.