What happened
The top three finishers CRYPTOCURRENCIES (excluding stablecoins) in terms of market capitalization are Bitcoin (CRYPTO: BTC), Ethereal (CRYPTO: ETH), Y Binance Coin (CRYPTO: BNB). When these three tokens are moving, particularly in the same direction, the entire market tends to follow them. Today, they are all seeing double-digit declines over the past 24 hours, down 10.2%, 12.6%, and 10.1%, respectively, as of 11:30 a.m. ET.
The entire crypto market is under siege, mainly due to macroeconomic factors such as rising US Treasury yields. Anticipation that further interest rate hikes are coming is driving down valuations in most risk assets. Recently, an increased correlation between cryptocurrencies and high-growth tech stocks has resulted in a massive capital churn out of these sectors.
Image source: Getty Images.
Reportedly, forced liquidations in the crypto world have exceeded $600 million in the last 12 hours. Bitcoin and Ethereum accounted for more than half of these total liquidations.
Furthermore, market sentiment appears to be entering extreme bearish territory. Assets that have benefited from bullish sentiment over the past year are returning to their long-term average. It remains to be seen how long this reversal will take.
And that
There is a lot to discover with today's price action in the world of cryptocurrencies. In fact, seeing the three largest cryptocurrencies in the world drop by double digits is not something that investors see every day. Right now, sentiment is extremely ugly in the crypto world and investors seem to be looking for safe places to hide.
The thing is, Bitcoin and Ethereum, for the most part, have been among the โsafe havenโ assets that many crypto investors have sought out. Forced liquidations and capital outflows from crypto seem to be more important to investors than the hedging attributes of these top tokens at the moment.
Now what
Cryptocurrency investors and stock investors cannot control the macro narrative. Right now, investors are panicking, as evidenced by these incredible declines among today's top cryptocurrencies. So far, 2022 is shaping up to be quite volatile (to say the least) for the entire crypto market. The fact that these top three tokens act more like the smaller-cap tokens is not a good sign for those pessimistic about the short-term outlook for the crypto sector.
That said, longer term investors may view these dips as buying opportunities. The best time to pick up shares or tokens of the companies or cryptos you like is when there is blood on the streets. Finding an exact background is impossible, and in fact there may be more drawbacks from here. Consequently, investors should trade carefully in this environment, bullish or not.
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chris macdonald own Ethereum. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
