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Why are Bitcoin and Ethereum – Related Stocks Crashing?

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Cryptocurrencies

Most of the crypto industry has been trading in the red for three or more consecutive days now. Bitcoin itself lost nearly $10,000 of its price between September 20th and September 22nd, going from nearly $49k to $39,876, which is the first time it dipped below the $40k support in over a month.

Fortunately, the support at $40k still holds strong, and while it failed to stop its price to very briefly go below it, it was still strong enough to make it bounce back up to the price at the time of writing — $42,134.

Ethereum price saw great losses itself, going from $3,096 — its highest point in the last 24 hours, to $2,717 around the same time when Bitcoin fell below $40k. Like BTC, however, Ethereum also saw a quick recovery to levels above $2,800, currently sitting at $2,876.

Obviously, both coins are barely above their major support levels, and the fact that they managed to return from such strong dips serves as very convincing evidence of how strong these supports are. However, no support can hold forever, so investors and traders continue to hope that the bear market will soon end, before these strongest levels get broken, and the leading coins start engaging in free fall.

The crypto market’s newest bearish wave spares almost no one

On the weekly level, Bitcoin and Ethereum are both trading in the red, BTC being 10.50% lower than a week ago, while Ethereum sinking by 15.29% during the same period. They are not the biggest losers among the top 10 largest cryptos, however. Binance Coin also lost 14.68% on a weekly level, Cardano is down by over 13% weekly, and even XRP lost more than 14%.

The worst performers, however, are Polkadot, which lost over 25% weekly, and Solana, which saw its price drop by 20% in the same time period.

As for the last 24 hours, while they did bring drops to all of the mentioned coins, as well as many others, the 24-hour drops have been relatively mild. Bitcoin itself lost 1.44%, while Ethereum went down by 4.06%. Polkadot was down by 4.01%, with the biggest dropper among the top 10 cryptos being Solana at 5.60%.

Dogecoin, which sits at the 10th spot, did lose 12.915 weekly, but on the 24-hour chart, it is actually up by 1.19%, which makes it the only coin among the top 10 to see any kind of growth. However, it is definitely outperformed by Avalanche, the 11th-largest crypto, which went up by 10.55% in the last 24 hours, and is up by 18.88% weekly.

Crypto-related firms see their stocks crash too

Unfortunately, the drop that affected so many digital assets went beyond just cryptocurrencies, also affecting crypto-related companies and their stocks. Some of the most notable examples in the last three days, which is when the new bearish wave appears to have started, include the likes of Coinbase Global, Marathon Digital Holdings, as well as Riot Blockchain.

Marathon Digital, for example, is a company that focuses on mining digital currencies. It owns its own crypto mining gear, as well as a data center that allows it to mine digital assets. Its mining center is headquartered in Canada, and the company saw severe drops recently.

On Monday morning, when the price crash had started, the company was trading 9% lower, at $32 per share. It saw a slight recovery to $34.5 after that, and since then, it has been fluctuating between this price and $32.75. In total, it lost 7.90% off its price in the last 5 days, currently sitting at $33.24 according to data from NASDAQ.

The next most notable dropper is Riot Blockchain — a company focused on creating, supporting, managing, and operating blockchain technologies. This company’s own portfolio consists of several others, including Tesspay, Varady, Coinsquare, and more.

Similarly to Marathon Digital, this company also saw a strong drop from $29.34 on September 19th to $27.25 early on September 20th. However, while Marathon Digital quickly recovered and became relatively stable after a few days of fluctuating, Riot Blockchain’s price continued to head down.

It did, of course, see fluctuations of its own, but each time, it would breach its support level a bit more, eventually reaching its bottom, which is currently at $27. The price of the share is at $27.36, after the firm’s stock lost $7.94% in the last five days.

Finally, there is Coinbase Global — a well-known crypto platform that serves as a provider of financial infrastructure and technology for the crypto economy. The company’s stock price actually started dropping from $245 a bit earlier than those of the other two firms, finding its bottom at $232, losing a total of 5% on Monday.

However, NASDAQ’s data shows that Coinbase has performed significantly better than the other two firms. Instead of getting stuck in a limbo, fluctuating up and down between certain support and a certain resistance, its stock actually started seeing a strong recovery.

It did hit a resistances that briefly overpowered it, sending it a bit down, but each new support was higher than the last one, and each resistance fell on the second try to go past it, allowing Coinbase to climb to $238.46 in the last three days. It is still 2.27% below its price on September 19th, but out of the three, this company saw the best recovery thus far.

What is next for the crypto industry?

Obviously, the crypto industry remains highly volatile, which is not surprising, given the impactful events that are taking place all the time. The market sentiment is all over the place, the DeFi sector is under attack by a series of hacking exploits, and the regulatory situation remains as unclear as ever.

On the positive side, regulators around the world do seem to be working on bringing crypto laws, and also, despite unfavorable price movements, blockchain adoption continues without stopping. Institutions are looking forward to drops as it means that they get to buy the dip, which will eventually increase scarcity of the largest cryptos, allowing them to grow further.

In the long run, everything that is taking place in crypto right now will enable price growth. In the meantime, the unpredictability seen in crypto remains high, and investors and traders are advised to be extremely cautious when dealing with digital currencies themselves, as well as crypto derivatives, stocks of crypto firms, and other trading instruments and assets.

Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.

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