The past 24 hours have been tumultuous for some of the world’s largest cryptocurrencies. On Tuesday, Bitcoin (CRYPTO: BTC) hit a peak of $68,800 before crashing to $61,400 just five hours later. As of 11 a.m. on Wednesday, it has stabilized around $66,500.
In a similar fashion, Ethereum (CRYPTO: ETH) also reached a peak of $3,805 on Tuesday, then dropped to $3,360, and is now back up to $3,800. Dogecoin (CRYPTO: DOGE) experienced a slide from $0.188 to $0.132, but has since rebounded to $0.162.
Bitcoin’s sudden drop was largely due to profit-taking by traders and selling by Bitcoin miners looking to lock in profits. The blockchain technology also allows for quick tracking of crypto movements, providing insight into market activity.
The influx of funds into Bitcoin ETFs, such as the BlackRock iShares Bitcoin ETF (NASDAQ: IBIT), has helped keep the market afloat. This fund currently holds 183,000 Bitcoin and is one of the largest holders of the token in the world. The rise in ETF investments has also driven up the price of other cryptocurrencies, as Bitcoin is seen as a leading indicator for the industry.
This trend bodes well for Ethereum and Dogecoin, which may also see their own ETFs approved in the future. However, regulatory approval from the Securities and Exchange Commission is still needed, and ongoing court cases may provide more clarity on the classification of cryptocurrencies as securities.
Investors should approach the crypto market with caution, as the recent price surge has been driven primarily by speculation and influx of funds. Just as prices have risen, they can also come crashing down. Additionally, the valuations of growth stocks have become stretched, potentially making their continued rise unsustainable.
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Travis Hoium holds positions in Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy. Original article published by The Motley Fool.
