Watch below! This Crypto Dropped More Than Netflix This Morning

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What happened

Markets opened with a bang today. Shares of streaming platform Netflix Inc (NASDAQ:NFLX) fell 20.7% to start the trading day at 9:30 a.m. ET, as investors priced in slower subscriber growth. However, around the same time, cryptocurrency Loopring (CRYPTO: LRC) actually fell over 21%, and it is currently surveying Netflix for losses today.

The crypto market is in turmoil today following the release of the highly anticipated Federal Reserve report on Central Bank Digital Currencies (CBDCs). Although the Fed has not taken an official position on integrating CBDCs into its toolkit, the central bank is exploring this option further. This has put pressure on the crypto industry as a whole, as investors see CBDCs as a competitive force and a potential regulatory catalyst for the industry.

Image source: Getty Images.

Additionally, a market-wide risk reduction of investors’ portfolios appears to be in play today. Tech stocks and cryptocurrencies are moving in a higher correlation, increasingly being viewed equally as high-risk, high-growth assets. In tech-focused selloffs such as the one we saw earlier this year, this is not a good thing for tokens such as Loopring.

So what

As another Ethereum scaling protocol, Loopring has been seen by many investors as a way to play amplified growth on the Ethereum network. Of course, as investors de-risk their portfolios, tokens that offer upside or downside leverage are the hardest hit today. Loopring happens to be among the biggest declines of the top 100 tokens today.

How long this strong correlation between cryptocurrencies and tech stocks will last remains to be seen. However, seeing Netflix’s impressive downside mirrored by specific crypto tokens is certainly ringing alarm bells for some investors taking a risk-free approach this year.

Now what

Like many tech stocks, cryptocurrencies are currently facing a number of headwinds. Traders and speculators seem to be pushed out, leaving long-term investors and “true believers” to hold their own at this time.

For those who truly believe in the long-term growth potential of the crypto sector, this drop may be a great buying opportunity. Of course, this view must be weighed against the possibility that the market will continue to decline. Right now, there is amplified fear in the uncertainty about the bottom of tech stocks and crypto tokens.

For those looking to be greedy when others are scared, today’s price action suggests that is easier said than done.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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