What took place
The overall bitcoin market’s price movement today hasn’t been good. As of 3:30 p.m., the whole market has fallen more than 4.1% over the previous 24 hours, led by Bitcoin (BTC -4.73%), Solana (SOL -10.32%), and Avalanche (AVAX -11.23%).
Unsurprisingly, the 4.1% decrease in Bitcoin’s 24-hour price followed the market’s collapse. But today’s losses were more pronounced for Solana and Avalanche, which fell 6.9% and 7.5%, respectively, during the same time period.
As a result, it is evident that investors are alarmed by a number of sector-specific challenges because Bitcoin is now trading at roughly $22,000 at the time of writing. The source of uncertainty at this time seems to be the increased scrutiny from American authorities.
Some members of the cryptocurrency community are alarmed by an investigation into prominent cryptocurrency exchange Kraken that has been publicly revealed, as well as comments made by Brian Armstrong, CEO of Coinbase, suggesting regulators may next focus on staking.
In addition, depending on the specifics of the rumored settlement, the long-running dispute between XRP and the Securities and Exchange Commission over whether or not its token qualifies as a security might add still another layer of regulatory risk.
What then
The crypto community hasn’t been concerned about regulatory matters in a while. The critics’ astute highlighting of sector-specific hazards last year has mostly been hushed by leading cryptos’ fairly raucous performance this year.
As a result, after a year in which essentially no positive catalysts were being priced in, this year’s performance seems to be just the reverse, with investors preferring to politely overlook a number of persistent headwinds.
Numerous variables will determine how far the large-cap token rallies in Bitcoin, Solana, and Avalanche can go. The macroeconomic climate will need to continue to be strong, which has helped most high-risk investments this year.
So what?
That is the scenario that many bulls are hoping would transpire in order for this year’s surge to continue.
I have no clue where the cryptocurrency industry will go in 2018. The current risk asset surge is favorable for long-term investors. However, being too comfortable in this high-risk environment may be harmful, as we witnessed with rallies last year.