Today, cryptocurrencies have suffered widespread losses, followed by other assets such as stocks and commodities, which have depreciated.
Bitcoin has fallen to the lowest level of $ 42,527.50 since August 7, as CoinDesk figures show.
At the time of this writing, both ether and Cardano’s ada have fallen by more than 10% in the last 24 hours, so other digital currencies have also fallen. Additional CoinDesk data reveals.
According to Google Finance, the major stock indexes were also in the red, with the S & P 500 index and the Dow Jones Industrial Average falling 1.7% and 1.78%, respectively.
The S & P GSCI index, which is widely used as a commodity price benchmark, fell 1.7%, as evidenced by additional Google Finance data.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
There were various explanations for the causes of the widespread sale, but one factor that was repeatedly mentioned was that Evergrande Group, a major Chinese real estate company, could default and weaken the world’s second-largest economy. I was worried that I had sex.
With uncertainty surrounding the Federal Reserve, when will current monetary stimulus begin to shrink?
The central bank will start a two-day meeting tomorrow, and many investors will look to better understand the future policy developments of this financial institution.
One of the big breakthroughs was that cryptocurrencies seemed to move in exactly the same direction as traditional assets. This was not always the case.
Several analysts have considered this situation and provided a different perspective.
“Initially, the story focused on alternative investments, crypto,” said Jordy Pasquale, CEO of cryptocurrency hedge fund manager Bitbull Capital.
However, “the market is becoming more and more correlated due to the influx of institutional investors and the general overlap of market participants,” he said.
“In the future, as the pool of market participants across the traditional and crypto markets becomes more homogeneous, such a correlation could be further strengthened,” said Di Pasquale.
Tim Enneking, Managing Director of Digital Capital Management, shared a similar view.
“In many ways, fiat is more correlated with the fiat market, as more’fiat’investors are investing in fiat,” he said.
“The idea of’risk off’is not unique to one asset class, so when people are concerned (or panicked), they throw it all away. “
“On the other hand, there is no real reason for such a correlation. Therefore, when fiat money turns flat or bearish, investors begin to look for yields-and many find them in cryptocurrencies. Probably, “said Enneking.
“In other words, the crypto market will initially follow the fiat market, but it will reverse much faster because there is no underlying reason for the decline.”
“The Evergrande situation presents a broader debt problem (and, to some extent, the Communist government’s crackdown on some aspect of the’capitalist’economics). It wasn’t that one company that caused the drop, it was the company that caused it. ”
“Therefore, at a basic level, today’s event proves positive from cryptocurrencies,” he said.
Enneking summarized it in one word about what crypto investors should learn from now on: Patience.
Civic co-founder and CEO Vinny Lingham also commented on today’s price volatility.
“When the global market is disrupted, all liquid assets are affected. We saw this at the start of covid.”
“Cryptography is not exempt, but it probably outperforms other assets in the long run, as the money that goes into cryptography hedges other risks in the wider economy.”
Pat White, co-founder and CEO of Bitwave, emphasized the widespread exposure of the digital currency market to global economic events and talked about another important point.
“In terms of what to learn, I think US investors in particular should remember that cryptography is around the world in a way that other assets don’t really do.”
“Cryptocurrencies are exposed to various markets and countries in a very surprising way. When you access cryptocurrencies from a purely US-centric perspective, there are things in the market that have nothing to do with the US on these days. A large swipe. “
Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ethereum and EOS.