The cryptocurrency industry suffered bearish trades on Friday. No crypto coin was spared, with big markets crashing in double digits as several altcoins dropped by 20 percent and more. Fans reveal a myriad of reasons for this sudden sell-off.
Most traders are probably familiar with the volatility of the crypto space. However, the past couple of days has been some of the worse in the history of cryptocurrency.
According to The Motley Fool, as of Friday 11 AM ET, Solana dropped by 19 percent, Cardano dropped by 16.4 percent, Polkadot dropped by 16.3 percent and Dogecoin dropped by 11.8 percent.
Although fans did not elaborate about Bitcoin and Ethereum, it is worth noting that both also dropped by 7.46 percent and 9.31 percent at the time of writing, per CoinDesk.
Crypto Crash Explained: Why Dogecoin, Solana and Cardano Prices Dropped
The Motley Fool listed three big factors for the dip in the market. They said investors might have lost their interest, crypto trading sites are being attacked, or a massive liquidation is happening in the industry.
It said that the recent increase in interest rates discouraged traders from investing in the market. This prompted investors to move out of growth stocks and cryptocurrency in favor of safer and secure assets. The decision led to an increase in stock sell-off in late 2021 up until this year.
Another notable factor might be the recent $30 million hack of Crypto.com, which dampened the interest and confidence of most traders. Even worse, the event planted fears that other crypto banks might also be easily hacked. This fear could have also urged investors to withdraw their digital assets from the crypto space.
Lastly, The Motley Fool noted that cryptocurrency swings in the market are mainly due to leveraged positions that can get liquidated by an exchange. Due to the events listed above, coinglass.com recorded over $874 million cryptocurrencies being liquidated in the past 24 hours alone. This signified a huge loss in the cryptocurrency market cap.
These three factors influenced each other and led to an unprecedented sell-off in the cryptocurrency markets.
Will Solana and Cardano Price Still Recover?
Although current markets are a bit dire, there are a few positive points to keep in mind. Cryptocurrency promotes utility in the internet space on top of being a digital asset. This means its value can still grow depending on how it would be used years from now.
Some obvious examples are Solana, Polkadot and Cardano. Note that these three have been investing in their utility by creating their own ecosystem of products and services. Some of its participation can already be seen in the growing metaverse.
For now, there is a lot of speculation and criticism about cryptocurrencies. However, its value is not ultimately defined by fan hype. The Motley Fool speculates that billions of dollars can still flow in the crypto economy in the future, depending on their incoming projects. Fans are recommended to keep an eye on more updates about these cryptocurrencies.
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