Why Algorand, Curve DAO, and EOS Crashed This Week

What happened

It's been a rather bearish week for most cryptocurrencies, with the aggregate value of the crypto market dropping by approximately 7.5% from the close of the stock market last Friday. However, a few notable underperformers have been receiving particularly negative attention from investors. 

As of 2:25 p.m. ET, Algorand (ALGO 1.93%), Curve DAO (CRV -6.16%), and EOS (EOS 5.38%) had declined by 16.3%, 13.4%, and 14.2%, respectively, since last Friday's market close. Those moves were driven by a number of token-specific catalysts.

So what

Algorand's steep drop can be attributed mainly to a Securities and Exchange Commission (SEC) filing that was made public on April 17 in which charges were laid against crypto exchange Bittrex.

In that filing, the SEC asserted that Bittrex has been acting as an unregistered securities exchange, and alleged that the Algorand cryptocurrency (among others) is also a security. The Algorand Foundation responded to this via a tweet in which the developers behind the project disputed that assertion. However, investors are clearly now pricing some significant additional regulatory risk into this token.

Curve DAO has seen significant volatility build in recent weeks, with the token's price moving up and down sharply. However, a surge in long liquidations, according to data from Coinglass, suggests that the unwinding of bullish derivatives bets on this token is responsible for much of Curve's latest move to the downside. EOS also saw similarly high liquidations form on and around April 18 as market volatility picked up and tokens really began to drop in earnest.

Now what

These three crypto projects are each experiencing significant volatility, but for different reasons. In the case of Algorand, and the five other tokens listed in the SEC charges against Bittrex, regulatory headwinds are likely to keep downward pressure on their prices, at least over the intermediate term. Layer in the significant unwinding of bullish derivatives bets in the crypto sector, and you have a recipe for the kind of weekly moves we've seen.

These three tokens are connected to intriguing projects with their own sets of catalysts. But right now, the data suggests  that investors are attempting to de-risk their crypto portfolios, and focusing on higher-quality tokens.