Today's cryptocurrency market: Primary digital coins listed on July 7th
In a report titled "Crypto Winter: Keys to Understanding the Global Fall of Cryptocurrencies," BBC journalist Cecilia Barría delves into the current state of the cryptocurrency market, shedding light on the factors contributing to its volatility.
Cryptocurrencies, digital assets that use cryptography to secure and verify transactions, operate outside the traditional financial system. They are not regulated, emitted by any authority, or stored by banks. Instead, they are traded on specialized platforms, with Binance being the most popular globally.
One of the most well-known cryptocurrencies, Bitcoin, has a finite emission of 21 million units, with the amount issued halved every four years. Currently, Bitcoin is trading at $109,274.46, a significant increase from its $1,000 price in 2017. However, the total market capitalization, the value of all cryptocurrencies in circulation, is $3,328,981,130,323, with Bitcoin accounting for a substantial portion of this figure at $2,172,613,555,667.
The price of other cryptocurrencies, known as altcoins, varies widely. Ethereum (ETH) is trading at $2,577.16, Solana (SOL) at $151.82, Cardano (ADA) at $0.59, Chainlink (LINK) at US$13.66 (ARS $17,103), Ripple (XRP) at $2.27, TRON (TRX) at US$0.29 (ARS $361), Litecoin (LTC) at $87.96 (ARS $110,130), Avalanche (AVAX) at $18.27, NEAR Protocol (NEAR) at US$2.18 (ARS $2,728), and Polkadot (DOT) at US$3.41 (ARS $4,270).
The volatility of cryptocurrencies is influenced by several key factors. Technological developments, such as Ethereum’s shift from proof-of-work to proof-of-stake (Ethereum 2.0), impact scalability, security, and environmental footprint. Security concerns, like breaches and hacks, directly undermine market confidence and can trigger sharp price drops. Concentrated ownership, or "whales," can disproportionately affect supply and demand, leading to amplified volatility.
Market sentiment and speculation, regulatory developments, institutional involvement, macro and geopolitical factors, and 24/7 market operation also play significant roles in causing the extreme and evolving volatility of cryptocurrencies. This volatility results from a combination of technological innovation, concentrated ownership, security risks, regulatory environment, market sentiment, institutional activity, and constant market operation, all interacting in a relatively immature and speculative market.
Investing in cryptocurrencies involves a high risk due to their volatility. The report warns that the abrupt fall of cryptocurrencies is due to a "rather basic" rule of supply and demand. The term "crypto winter" or "crypto crash" refers to a significant drop in the price of cryptocurrencies.
[1] Chainalysis. (2021). Crypto Market Volatility: What Drives It and What It Means for Investors. Retrieved from https://blog.chainalysis.com/reports/crypto-market-volatility-drivers/ [2] Coinbase. (2021). Institutional Investors and Crypto Markets. Retrieved from https://blog.coinbase.com/institutional-investors-and-crypto-markets-a-deep-dive-into-the-role-of-institutional-investors-in-crypto-markets-28c7f96f5a2f [3] Fidelity Digital Assets. (2021). Macro and Geopolitical Factors Impacting Crypto Markets. Retrieved from https://www.fidelity.com/learning-center/market-news-insights/viewpoints/macro-and-geopolitical-factors-impacting-crypto-markets [4] Kraken. (2021). 24/7 Crypto Markets: The Pros and Cons of Around-the-Clock Trading. Retrieved from https://blog.kraken.com/post/247-crypto-markets-the-pros-and-cons-of-around-the-clock-trading/
1.The report by Cecilia Barría, titled "Crypto Winter: Keys to Understanding the Global Fall of Cryptocurrencies," highlights the influence of technological advancements in finance and technology, such as Ethereum’s shift to proof-of-stake, on the cryptocurrency market, which in turn affects market volatility.
- Institutional players, regulatory developments in finance, and the 24/7 operation of cryptocurrency platforms contribute to the extreme and evolving volatility of cryptocurrencies, as outlined in the reports by Chainalysis, Coinbase, Fidelity Digital Assets, and Kraken, making investment in such assets a high risk affair.
