Why Bitcoin, Ethereum and Dogecoin fell today

What happened

Cryptocurrencies had a tough day on Sunday after a healthy recovery last week. But in cryptocurrencies, we have recently seen that the momentum does not last long.

From 16:00 ET, Bitcoin (BTC -2.74%) is down 3.5% in the last 24 hours, Ethereum (ETH -3.53%) has fallen 4%, and Dogecoin (DOGE -3.62%) is at 3.8 percent. But in the last week, the same cryptocurrencies are up by 7.4%, 8.7% and flat, respectively.

So what

More pain is reported in the crypto lending area as the stock exchange Blockchain.com allegedly faces a loss of $ 270 million on loans to Three Arrows Capital. The security damage and the network of loans in the crypto room have emerged after Three Arrows Capital filed for bankruptcy in the USA and has begun to be liquidated.

The good news is that Celsius continues to relax its complex positions. Over the weekend, it will have repaid $ 258 million to Aave and Compound to release $ 950 million in security. If Celsius can liquidate its positions and take security, we can see that they can repay customer funds when they want to withdraw. The problem is that regaining security can also mean selling cryptocurrencies, dumping more on the market at a time when buyers are scarce.

Bitcoin may also come down after Binance on Friday announced the ability to trade that currency without fees. Trading volume increased as a result, which subsided when the first abundance took off.

What now

Weekends can be volatile for cryptocurrencies because the volume goes down and any news can move the market extremely quickly. With all the liquidations in crypto today, it is possible that we will see even more sales pressure in the coming weeks as large leveraged positions are wound up. But that is not what will drive the price of cryptocurrencies in the long run.

I think it’s worth taking a step back to think about what’s evolving using cryptocurrencies and the blockchain as a base. There are now thousands of developers building businesses backed by billions of dollars in capital, and we are just beginning to see the fruits of that investment. Over the next few years, we will probably see many types of transactions move to the blockchain, and companies will begin to build more use cases over time.

I am in favor of this building taking place, but given the proliferation of cryptocurrencies over the past year, it is not surprising to see a withdrawal. Traders who lose money leave the market and mortgaged positions are wound up. It will take time, but in the long run we must remember that a lot of value is built, and it will be good for investors who buy and hold.