Bitcoin, Dogecoin, and Ethereum’s share prices dropped sharply this week while others rose. Here are some possible reasons why.
The cryptocurrency market is volatile, and its unpredictability reared its ugly head this week after token prices plunged. After a year of gains, cryptocurrency prices were down on Monday, Jan. 10. Here are the highlights:
- Bitcoin’s price dropped as much as 5% to $39,692, which was the first time it fell below $40,000 sine last fall.
- Ethereum fell to $2,979.
- Dogecoin was down 4.4%.
- Baby Doge’s price rose by 99%.
There has been widespread speculation about why the crypto market went down this week, with a few reasons standing out the most.
The Federal Reserve released its December meeting minutes, detailing its plans to cut the number of bonds it is holding and dial back its monetary policy support. The central bank also reported that it might have to raise interest rates sooner than expected. As a result, weary investors quickly began to sell off their crypto portfolios, stock prices fell, and government bond yields rose.
Crypto price drops also come after disappointing stats emerged from the December Jobs report. The U.S. Bureau of Labor Statistics reported that only 199,000 new jobs were added in the last month of 2021 when it expected to see nearly 500,000. The uncertainty of the economy may have caused investors to tighten up their money.
We can’t deny that cryptocurrency was booming in 2021, but you know what they say: more money, more problems. One thing crypto investors will always have to worry about is cybersecurity. Crypto-related crime was at an all-time high last year and NBC reported that crypto hackers stole $14 billion in 2021 alone, which was 79% more stolen money compared to 2020. The rise in decentralized financial platforms definitely helped crypto scammers fill their pockets. Investors probably expect these big crypto losses in an industry that’s not regulated, but $14 billion is a number you just can’t look past easily.
Recovering from an exhausting week
We can’t forget about Elon Musk, because of course he popped up in this discussion. In February 2021, Tesla began accepting Bitcoin as a form of payment, but three short months later, the company reneged, citing that it was concerned about how eco-friendly mining the crypto would be. Tech Crunch and other outlets reported last summer that Tesla would soon reverse that decision and accept Bitcoin again, but that still hasn’t happened and the crypto community didn’t forget about that.
But it’s no secret that when Musk tweets about crypto, token prices fluctuate fast, and that proved true when he tweeted on Friday, Jan. 14, that some Tesla merchandise could be bought with Dogecoin moving forward. Following this tweet, Dogecoin prices shot up by 14%. Some experts are saying this decision makes Dogecoin have more institutional adoption over Bitcoin.
It’s safe to say Dogecoin co-creator Billy Markus is geeked about this decision:
Since Jan. 10, leading cryptocurrencies seem to have made a full-ish recovery. Coinbaise reports that the market is up 1.44% since Friday morning. Here are the latest prices for a few of the notable ones via Coinbase:
- Dogecoin: $0.19
- Bitcoin: $42,788.31
- Ethereum: $3,288.74
- Binance Coin: $493.20
- Solano: $144.70