3 reasons why Bitcoin, Ethereum and Solana fell again today

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What happened

Volatility took negative shape again in the crypto world today, with three of the most watched cryptocurrencies plunging again to start the week. As of 8:30 a.m. ET, Bitcoin (CRYPTO:BTC), Ethereum (CRYPTO:ETH) and Solana (CRYPTO:SOL) each fell significantly, after falling 2.3%, 2.8% and 4.2 %, respectively, over the last 24 hours.

These movements seem to be a function of at least three main drivers today. Among the key factors that many investors watch is the directional volatility priced into these options market tokens. Reports today suggest that Bitcoin’s buy premium, a measure of the excess price investors are willing to pay to hedge their downside Bitcoin exposure, has hit a new six-month high.

Image source: Getty Images.

This bearish view of major tokens such as Bitcoin bled into a recent research note from JP Morgan, suggesting that institutional adoption of Bitcoin may be slowed by this “excessive volatility.” Additionally, analysts are concerned about Ethereum’s declining market share in the decentralized finance (defi) and non-fungible token (NFT) spaces.

Although it is one of the blockchain networks that has taken market share from Ethereum in these growth areas of the crypto world, Solana has not been without its problems lately. It appears that continued concern over recent network disruptions is prompting investors to continue trading the SOL token lower today.

So what

Overall, the crypto industry can only be described as one that is currently under siege. The entire crypto market has lost around half of its valuation over the past 10 weeks, suggesting that what goes up fast can go down just as fast.

Options pricing and analyst ratings on the crypto sector certainly provide an objective perspective for those trying to gauge where crypto will go from here. Last year’s impressive rally in most major cryptocurrencies has sparked valuation concerns among some investors and a growing desire to take profits among others who may be longer-term investors. . Investors are likely to watch these key factors closely.

Now what

Bitcoin’s status as a store of value and potential market hedge appears to be under siege, with market forces continuing to affect this top cryptocurrency in ways many investors thought impossible.

Aside from market-related catalysts, there are some fundamental factors underlying the recent underperformance of Ethereum and Solana that are also of concern to many investors. These are two of the leading tokens generating utilities through their smart contract blockchain networks and growing ecosystems, and the slowing growth is causing investors to question the investment thesis of these tokens.

All in all, 2022 is shaping up to be a tough year for crypto investors. Until the winds change, it looks like investors may want to brace themselves for more volatility ahead.

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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