Another bearish turn for leading cryptocurrencies. Over the previous 24 hours of trading, the respective token prices of the three were down roughly 5.6%, 6.8%, and 8.9%. E.T.
The steep valuation declines for most cryptocurrencies on Black Friday seemed to have been absorbed by investors. Many top cryptocurrencies had been posting strong gains over the last week, but valuations are once again tumbling in today's trading session.
The image is from the same source.
So what?
The appetite for risk by investors is not as high as it used to be. The week started with a recovery after recent sell-offs, but both stocks and cryptocurrencies moved lower as the week went on, and more volatility could be on the way.
The quick recovery posted by many cryptocurrencies after last week's big Black Friday sell-off is on the verge of being short-lived. The news of the spread of the virus and the potential impact it could have on supply chains and other aspects of the economy is pushing investors to become more risk-averse.
Concerns about the omicron variant may be having a less direct impact on the valuations of cryptocurrencies than supply chain issues would suggest. Growth- dependent tech stocks had a bad week, with the tech-heavy index closing out the week down 2.5%. Big sell-offs for stocks may be causing investors to become more risk-conscious in general and move out ofcryptocurrencies.
In addition to omicron fears, rising Treasury bond yields may be prompting investors to move out of riskier investments in pursuit of safer returns. The potential for new regulations may be weighing on the valuations of cryptocurrencies. India has recently put forward legislation that could ban all private cryptocurrencies, and the U.S. recently signed a spending bill that included new taxes for cryptocurrencies. On Friday, there were a lot of bearish catalysts for various factors.
What now?
The recent pricing moves are substantial in absolute terms, but the pricing swings look normal when viewed in historical context. The market for cryptocurrencies is highly volatile, and even well-established coins such as Solana, as well as newer ones, are prone to posting big pricing swings on little if any news.
YCharts has price data for ether.
Despite the recent sell-offs, all of the major criptoms have posted gains in 2021. The SOL token's gains across the stretch are eye-catching and have been driven by surging adoption for the network, but investors should keep in mind that the market remains highly volatile and prone to pricing trends.
The overall market is still in a bullish phase despite the recent declines in prices. The broader space for cryptocurrencies has seemed unstoppable despite intermittent setbacks this year.
Predicting bullish and bearish cycles in the market is very difficult, like predicting stocks. It's possible that the current bull market in cryptocurrencies still has plenty of legs, but investors should also be aware of the risk that the space will face more bearish pressures in the near future. Making steady purchases rather than large lump-sum buys is a way to mitigate the risks of investing incryptocurrencies.
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