Why Bitcoin, Ethereum, and Solana are all crashing today

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What happened

The cryptocurrency price explosion appears to have come to a screeching halt on Monday evening as a large cryptocurrency sell-off began. As of 11 a.m. EST on Tuesday, all major cryptocurrencies were down sharply, with some trading down 10% in the past 24 hours.

Bitcoin (CRYPTO: BTC) is the biggest and most notable move in the cryptocurrency world, falling 5.8% in the past 24 hours. After peaking at around $ 69,000 last week, the value of one Bitcoin briefly fell below $ 59,000 early Tuesday morning.

Ethereum (CRYPTO: ETH) was down 8% in the past day, briefly dropping more than 10% this morning. It fell 10.8% last week. Solana (CRYPTO: SOL) is down 6% in the last 24 hours and 9.1% in the last week. Dogecoin (CRYPTO: DOGE), which is the king of even coins, fell 6.5% in one day and 14.5% last week.

Image source: Getty Images.

So what

There isn’t a single factor causing cryptocurrencies to fall right now, but there is a convergence of things that add up.

The first is that China continues to want to eliminate crypto mining from the country. Officials from the National Development and Reform Commission told a press conference today that they will continue cracking down on mining, which likely means one of the world’s largest economies outright rejects cryptocurrency.

We are also seeing the dollar strengthening against other fiat currencies, and it also appears to be strengthening against cryptocurrencies. The dollar is strengthening in part because interest rates are rising, which could help slow inflation. But if investors have Bitcoin or another cryptocurrency as a hedge against inflation, the rise in rates and the rise in the dollar could cause them to unwind this trade.

We are also probably seeing a natural pullback in cryptocurrency values, which have risen in recent weeks. You can see below that since early September Bitcoin, Ethereum and Solana have been on fire, while the Dogecoin coin appears to have lost its luster.

Bitcoin price data by YCharts

Now what

Volatility is rife in cryptocurrencies, and for weeks volatility has been in favor of investors. Over the past 24 hours we’ve just seen this dynamic turnaround. There is no issue with a specific cryptocurrency, but rather a full crypto exchange.

This is where investors with a long-term view of the cryptocurrency industry should stay focused on why they are bullish on crypto and not just price movements. Nothing in the industry has fundamentally changed today except that prices are down against the US dollar, which is normal volatility for cryptocurrencies today.

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.

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