Why Bitcoin, Ethereum, and Dogecoin plummeted today

The cryptocurrency market has been gaining momentum throughout the year, but that trend looks set to end as April approaches. The overall market is down, but the biggest companies are leading the way.

bitcoin (BTC -5.80%) The stock fell 4.7% after the close on Monday. Ethereum (ETH -7.83%) It fell 6.5%, Dogecoin (viceroy -6.95%) There is a 6.1% discount. And this continues a bad week for the token, with drops of 9.7%, 8.1%, and 18.2% over the past seven days.

Cryptocurrency ETFs have reached saturation point.

When Bitcoin exchange-traded funds (ETFs) entered the U.S. market, they brought billions of dollars in new investments to the industry and Bitcoin, in turn, attracted the entire market. But that didn’t happen in Hong Kong.

Yesterday, Bitcoin and Ethereum ETFs were introduced in Hong Kong, but on the opening day, Bitcoin ETF trading volume was only $8.5 million and Ethereum ETF trading volume was only $2.5 billion. This could mean that interest in cryptocurrency ETFs is waning.

Binance Founder’s Fate

Another cloud hanging over the cryptocurrency is the sentencing of Binance founder Changpeng “CZ” Zhao in Seattle. He pleaded guilty to violating the Bank Secrecy Act last November, but prosecutors sought three years in prison.

It’s unclear what will happen to CZ, but much like what has happened in previous court cases and prosecutions, the cryptocurrency industry has had to contend with regulatory clarity and industry fraud. Investors were reminded of this today.

Momentum trading may be over

What’s more worrying for cryptocurrency investors is that the rally drivers of the past six months are now gone. Investors have maintained a ‘risk-on’ mindset since mid-2023 and now face the reality of a slowing economy and higher interest rates for longer than previously expected.

Cryptocurrencies were supposed to act as a hedge against these economic problems and offset the inflation caused by money printing. Nonetheless, the reality is that cryptocurrency trading is correlated with high-risk assets such as growth stocks. And if earnings miss expectations by even a little bit, many growth stocks fall.

Unless economic growth or investor risk appetite changes, cryptocurrency values ​​may be at their highest for some time.

How Cryptocurrencies Are Revitalized

Where I expect to see growth in the coming year is the utility that cryptocurrencies can bring to financial markets. Companies are testing or starting to use cryptocurrencies and blockchain for applications such as financial payments and bond issuance, and this is just scratching the surface of potential use cases. However, market value is still driven by hype and speculation rather than actual usefulness.

I think tokens that add utility will be the best places for long-term investments, which could mean meme coins like Dogecoin and tokens like Bitcoin, which are expensive to use for fund transfers, are left in the dust. . Blockchain is coming, but not all tokens will have value by then.