Why Polkadot, Solana, Binance Coin, and Cardano All Dipped Today
A little air has come out of the cryptocurrency balloon today and altcoins are feeling most of the pain. Bitcoin (CRYPTO: BTC) is down nearly 6% as of 3:37 p.m. EDT, but lesser-known coins fell more than double digits today.
In the last 24 hours only, Peas (CRYPTO: POINT) decreased by 8.1%, Binance Coin (CRYPTO: BNB) is down 6.4%, Solana (CRYPTO: SOL) plunged 9.7%, and Cardano (CRYPTO: ADA) is down 9.3%.
Today’s decision was largely blamed on traders who took profits across all cryptocurrencies, most of which saw strong progress over the past month. You can see below that every crypto mentioned above, apart from Cardano, has grown by over 20% over the past month.
The rise was prompted by the launch of a Bitcoin Futures ETF and discussions by US regulators on putting formal rules in place for cryptocurrencies, which would give them more legitimacy. What we haven’t seen yet is a lot of action that would increase the usefulness of one of these coins.
What’s difficult for investors right now is that there was very little fundamental news driving cryptocurrencies up in October and similarly, there is little news driving the market down today. hui. But there is red everywhere and it looks like the Bitcoin Futures ETF’s “news sale” continued this week.
Days like today are the risk of investing in cryptocurrencies. The market can go up and down at any time and when there is momentum in one direction or another it is difficult to stop.
To make matters worse for altcoins, every coin is unlikely to have long term value. Some investors think cryptocurrencies, like Bitcoin, are a store of value, while others think they have a use for buying or selling things. But if people use a variety of parts, it’s hard to have a standard for one or the other.
Right now, this dynamic means that speculators are particularly pushing the price of cryptocurrencies and altcoins up. Today’s drop is a reminder that these speculators can move in and out of a cryptocurrency quickly, which is why we are seeing so much volatility.
Different cryptocurrencies have different functionality and I think investors need to be clear about their investment thesis on a given cryptocurrency. It can be a store of value or a utility, but buying just because a cryptocurrency is growing or because you like the name is a bad investment thesis. In the long run, it’s the cryptocurrencies that add value in one form or another that will survive, so buyers should beware of buying something they don’t understand.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.