As of 11:08 a.m. ET, Ethereum was off by 2.8%, Dogecoin had lost 14.3%, and Solana had fallen 13.7%.
The cryptocurrency market has been in a freefall since Friday when Bitcoin’s price fell by more than 20%. As of this writing, Bitcoin was changing hands at $48,928, down 28.5% from the all-time high of $68,493 it hit just last month. That’s a fairly massive drop.
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Cryptocurrency investors may be concerned that the Federal Reserve is considering tightening its monetary policy in light of rising inflation, and that both the omicron variant and the ongoing delta surge are boosting uncertainty about how long it will be before life will get back to something more like the pre-pandemic normal.
Traders have generally been fleeing the tech sector as well as they look for safer places to put their money.
There’s still a fair amount of economic uncertainty right now that may be fueling investor concerns. On Friday, the U.S. reported lower job growth than expected, and over the weekend Goldman Sachs cut its 2022 U.S. gross domestic product growth forecast from 4.2% down to 3.8%.
The prices of other cryptocurrencies often follow the movements of Bitcoin — when the leading token tumbles, others typically follow suit. That appears to be happening Monday with the prices of Ethereum, Dogecoin, and Solana falling.
With Monday’s drop, Ethereum, Dogecoin, and Solana are down 7.8%, 33.4%, and 27.5% over the past three months, respectively.
By 2 p.m., Ethereum had bounced back and was up about 1% over the past 24 hours, Solana was at nearly break-even, and Dogecoin was up about 2.9%. The coins were rising again as Bitcoin’s price rose by about 0.6%.
Cryptocurrencies are prone to volatility and the initial price drop of these coins, and subsequent rise in the afternoon, is a perfect example of that.
Long-term investors should understand that the cryptocurrency market could experience more volatility, but it doesn’t mean that these coins are a bad investment. It just means that it may be a bumpy ride on the way to bigger gains.
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