• Sun. Aug 14th, 2022

Why is crypto down today? The digital currency is cooling after a brief rally.

Investors have been on a rollercoaster ride over the past few months when it comes to the cryptocurrency market. The crypto investing landscape has transformed into something completely different over the past year. Coins hit all-time highs in 2021 and then fell at an alarming rate. Bearish trends dominated heading into 2022. This week saw a flash, with currencies seeing big gains. Just when it looked like things were looking up, the market went downhill again. Why is crypto down today? Well, it looks like crypto is lacking the staying power it showed last year.

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The last two days of trading contrast sharply with the first two months of the year. Bitcoin (BTC-USD), which had seen its ups and downs throughout this period, finally recorded significant gains. After dipping near the low of $30,000 in late February, its gains since Monday have put it comfortably north of $40,000.

As Bitcoin has seen success, the industry in general has also seen success. Indeed, Bitcoin’s market capitalization of over $800 billion makes the coin worth nearly half of the entire crypto market. Thus, his success brought big wins to other players. Top winners included Earth (LUNA USD), which recorded a single-day gain of more than 23%, and the Layer 1 network avalanche (AVAX-USD), which increased by 17%.

Why is crypto down today? Bitcoin Sputters after a brief tear.

After such a tumultuous few weeks, the recent rally in crypto prices has been warmly welcomed by investors. Unfortunately, things ended faster than many had hoped.

Cryptocurrency in general just seems to show less stamina in its upward runs. Coins and tokens generally tend to fall, with a few exceptions. For example, Cosmos (ATOM-USD) and internet computer (ICP-USD) remain in the green today.

There are a few factors at hand here. One reason is that cryptocurrencies clearly haven’t performed to the 2021 standard; it will likely be some time before the market sees another steady bull run like it did a few months ago. Another reason is that investors generally tend to favor less volatile investments. Indeed, while crypto sometimes shows successful days, inflation issues and ongoing unrest between Russia and Ukraine scare investors away from high-risk investments. On the contrary, the trend suggests that stablecoin investments are where these buyers find refuge.

As of the date of publication, Brenden Rearick had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

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