What happened
cryptocurrency investors I woke up to a bear market on Monday, which is also tax day in the US. In a volatile market like cryptocurrencies, it seems like every day they go up or down a lot and today the sellers are winning.
Bitcoin ( BTC 2.82% ) had fallen as much as 4.1% by noon ET, while Ethereal ( ETH 2.31% ) fell to 5.8%, doecoin ( DOGE 0.79% ) fell 6.9%, and Shiba Inu ( SHIB 2.43% ) fell to 8%. The sale was widespread, so there is no reason to be especially concerned about any particular cryptocurrency.
Image source: Getty Images.
So what
It's hard to ignore that today is tax day in the US Crypto traders may be selling to pay taxes owed, which may be surprising if this is your first time paying taxes on large trading profits.
Over the weekend there was also news of a $182 million hack of the Beanstalk protocol, an Ethereum-based stablecoin credit protocol. This continues with a series of cryptocurrency hacks across the industry, undermining investor confidence in the ecosystem. This is an industry-wide problem and there doesn't seem to be a great solution right now.
The stock market in general has also fallen today and that has generally meant that the more volatile cryptocurrencies will magnify those losses.
Now what
Volatility is the name of the game in cryptocurrencies and that doesn't seem to be changing any time soon. Search the internet and you may find analysts and investors who fear inflation, regulation, or hacking, while others are optimistic for reasons ranging from innovation to cryptocurrencies being an inflation hedge.
For today, I don't see anything to worry about in any of these cryptocurrencies. Given the trends in the industry, I think Ethereum is the best bet given the real utility that can be built in the ecosystem and the projects that are already being built there. Bitcoin, Dogecoin, and Shiba Inu just can't claim the same kind of digital ecosystem.
If today's sale is really due to tax season or the stock market crash, this could be a good buying opportunity for investors. Today, nothing has fundamentally changed about cryptocurrencies and we are seeing the industry create more and more applications every day. We are also likely to get some regulatory updates in the US and Europe this year, which could be a boost for the long-term development of the industry.
When I see moves like this today, I tend to ignore them because nothing about cryptocurrencies is fundamentally different than it was a day ago. It's just that the current portfolios are a bit lower at the moment.
This article represents the opinion of the author, who may not agree with the "official" recommendation position of a premium Motley Fool advisory service. We are motley! Questioning an investment thesis, even one of your own, helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
