Cryptocurrency prices continue to excite and disappoint as the market bounces up and down. Watching the movements is enough to make you dizzy. But what’s going on and why has there been another correction in the market?
Compare stocks and shares ISAs
If you’re planning to open a stocks and shares ISA, choosing the right platform is important. To help you narrow down the choices, we’ve created a list of some of the top stocks and shares ISAs.
Why do cryptocurrency prices change so quickly?
Just like normal financial markets, cryptocurrency markets go through bullish and bearish periods.
However, because crypto markets are open 24/7 and there are minimal controls or regulations, everything happens in hyperdrive. Instead of prices changing gradually, they can swing wildly in minutes.
This is why you might see values rise quickly. Then, a few hours later, a crash or correction can wipe billions off the market.
Why have cryptocurrency prices dropped?
I’m sure that if you asked ten different people this question, you’d get ten different answers!
According to Simon Peters, cryptoasset analyst at multi-asset investment platform eToro, there are a number of reasons for the latest cryptocurrency correction: “The sell-off is being driven by a number of factors; valuations were at or near all-time highs earlier this month, so there will naturally be some profit-taking, while we are also seeing a general sell-off among risk assets – such as technology stocks – as economies start to unlock post the pandemic and investors fret over potential rate rises and higher inflation.
“However, for many cryptoassets such as Bitcoin and Ethereum, the long-term story has not changed. This emerging asset class continues to revolutionise many aspects of financial services, and while nothing goes up in a straight line, the long-term fundamentals for cryptoassets remain as solid as ever.”
Are you making these 3 common investing mistakes?
These all-too-common investing errors can cause you to miss out on the long-term wealth-building power that shares can hold….
To help you side-step these pitfalls, and move forward on your path to wealth-building, we’ve created a free report, “The 3 Worst Mistakes New Investors Make”.
Just enter you best email below for instant access to your free copy.
What about the Bitcoin price?
In the past, the whole market would move based on what was happening with Bitcoin. Recently, there has been some decoupling of prices. This just means that cryptocurrency prices are moving independently of each other rather than being tied to the whims of Bitcoin.
We’ve all witnessed Musk’s ability to influence stock prices and interest in things like Dogecoin, moving markets with just a tweet.
His latest was to notify the world that Tesla would no longer accept Bitcoin payments for vehicles due to energy consumption concerns. This was a hammer blow to crypto enthusiasts around the globe.
What’s next for cryptocurrency prices?
If only anyone had the answers. It would be the modern-day equivalent of getting your hands on the Sports Almanac from Back to the Future!
No one knows for sure what is going to happen with prices. According to Simon Peters at eToro, we’re going to see a continuation of trends and much of the same yo-yoing: “Indeed, we would expect to see buyers return to Bitcoin, Ethereum and peers in the next few weeks to take advantage of lower prices.
“Importantly, we continue to see higher lows, as well as higher highs, for cryptoassets as more investors enter this asset class, and we do not expect that trend to change.”
Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.