Is this the crypto winter?
What happened to Solana,Cardano
The cryptocurrency enterprise is having a difficult day as nearly each asset is down double digits or more. Some of the smaller utility tokens are down large even after bouncing off their lows inside the previous couple of hours.
As of 2 p.m. ET, over the last 24 hours, Solana (SOL -13.91%) is down 15.2%, Cardano (ADA -9.34%) has fallen 10.4%, and Polkadot (DOT -10.40%) has dropped 10.4%.
The biggest news today is that the Celsius Network, that is a decentralized finance utility, has frozen transfers and withdrawals due to market volatility. That’s induced a panic inside the marketplace due to the fact customers can’t promote out of positions and can’t even repay loans that may be out at the platform.
Binance, that’s the sector’s biggest cryptocurrency alternate, also paused Bitcoin withdrawals because of a “caught transaction.” Add each of those information items collectively and investors are understandably concerned that the decentralized nature of some of these products may not be as secure as they once concept.
It’s worth pointing out the crypto industry remains particularly younger and grew hastily within the previous couple of years, however hasn’t been strain tested like it’s far proper now. Stablecoins are under stress, decentralized finance protocols are failing, or even Bitcoin is falling. If you’re an investor it could seem there may be nowhere to show.
The cryptocurrency industry has grown at an explosive rate over the last two years in part because of all of the trading money that’s been brought into the industry. But that trend has reversed as the stock market has fallen, the Federal Reserve has raised interest rates and reduced quantitative easing, and crypto has started to show more cracks.
What Solana, Cardano, and Polkadot have in common is they’re utility tokens and developers can use their blockchains to build digital utility. This can be anything from decentralized finance projects to non-fungible tokens (NFTs). But the industry is very early in developing these business models and the value of these cryptocurrencies have likely gotten out ahead of where the blockchain development was.
With that said, I think it’s important to point out that billions of dollars are going to be flowing into cryptocurrency and the Web3 project over the next few years and there’s likely to be immense value build, just like when the internet was in its infancy in the 1990s. It will take time, but patient investors who are adding exposure to leading cryptocurrencies will be winners over the long term.
It’s not clear where the bottom for crypto values is, though, and this sell-off could last much longer. For now, fear has taken over the market and if that continues cryptocurrency valuations could continue to drop.
For more information: