Altcoins
Why Altcoins Were Crushed on Monday
The crypto market is currently feeling tired and in need of some good news.
This is not the first time that a lack of news meant bad news – or at least a lack of interest – for a large number of altcoins in the crypto market on Monday. While these declines are not cause for concern, they have extracted value from several crypto portfolios.
Formerly high-flying altcoins The sandbox (SAND -2.05%), Sui (SUI -2.46%), and Axie Infinite (AXS -2.21%) were all down about 6% by late afternoon. Steeper falls have been recorded by Battery (STX -2.06%) and Maker (MKR -3.52%), down 7% and 10% respectively.
No news is disheartening news
It’s not that any of these cryptos have received bad news. Rather, it’s the lack of particularly positive items that encourages people to sell them.
It’s really not that surprising. After all, in the span of just a few months earlier this year, we had several powerful developments that helped drive the desire for such investments – and, in turn, drove up their prices.
January saw approval and rapid introduction of the spot Bitcoin (BTC -1.19%) exchange-traded funds, which in one fell swoop created a relatively quick and easy way for the crypto-curious to buy and hold the most popular coin. Speaking of Bitcoin, its latest halving also got investors excited because history has shown that its price tends to rise sustainably after this event that happens every few years.
Spot crypto ETFs are set to debut in Hong Kong on Tuesday. However, that doesn’t spark enthusiasm for digital money…at least, not yet.
At the same time, the global and domestic economies appeared to be increasingly fertile areas for planting the seeds of crypto investments. Some key data sets seemed to indicate that inflation was starting to fall, and that when inflation falls, interest rates tend to fall. Lower rates mean a higher appetite for risky assets – hello cryptocurrencies! — so no more demand for your favorite coin or token.
Since then, inflation proved to be a more stubborn beast to tame, while many profit takers took profits following the spot Bitcoin ETFs and excitement over the 2024 halving (which took place earlier early this month). As is usually the case, Bitcoin’s trajectory mirrors that of a band of altcoins. By Monday afternoon, its price had fallen to just over $63,000. Less than a week ago, it was approaching $67,000.
The situation is better than some think
It’s not easy being an altcoin. Not only are they subject to the whims of macroeconomics in the broad sense (not to mention geopolitical developments), but they rarely escape the orbit of Bitcoin.
Crypto traders should not lose hope, however. Lately, there has been more good macroeconomic news than bad. Furthermore, on the geopolitical level, the situation seems to be improving – albeit gradually – both in the war in Ukraine and in the Middle East. This feels like a “hang in there and stay positive” moment for cryptocurrency enthusiasts.
Eric Volkman has positions in Bitcoin. The Motley Fool posts and recommends Bitcoin. The Motley Fool recommends Maker. The Mad Motley has a disclosure policy.