A notable headwind rocked the cryptocurrency market on Thursday, driving down not only the sector’s leading asset but a great many coins and tokens that tend to slipstream behind it.
It almost seemed as if none could really escape this trend. Closely watched utility coin Cardano (CRYPTO: ADA) and token Solana (CRYPTO: SOL) were both down over the 24-hour period from 4 p.m. ET that day. The former was in the red by over 6%, while the latter had lost nearly 5% of its value. The less useful Shiba Inu (CRYPTO: SHIB) was down by 6%, and Aptos (CRYPTO: APT) was faring worse with a 7%-plus slide.
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If such a quartet is tumbling in the mid-single-digit percentages over the past day, you can be pretty sure that crypto leader Bitcoin‘s (CRYPTO: BTC) price graph was moving south. Sure enough, as of this writing, it was sinking by almost 4%. A Christmas Day rally didn’t quite take the coin back to the vaunted $100,000 level it finally crossed over in previous days. It’s now trading, somewhat unsteadily, at a touch over $95,000.
Bitcoin and its progeny are particularly being affected by long-term yields. For the benchmark 10-year Treasury note, that yield continues to rally. On something of a tear since the early part of this month, it stood at just under 4.6% late Thursday afternoon. When the rally began, it was less than 4.2%. For a staid government debt instrument, this represents a meaningful bull run.
In its way, the Treasury note also serves as a competitor and a contrast to the cryptocurrency market. Rising rates for Treasuries — which are considered one of the safest investible assets, hence their benchmark status — tend to sap demand for the more risky investments on the scene. That’s why, most things being equal, the more volatile stocks often drop in value when long-term yields advance. And many investors consider cryptos even more volatile.
Another factor in Thursday’s crypto slump could simply be exhaustion. Trading volumes for coins and tokens were relatively low, particularly when matched against some of the hot days of the various rallies throughout this year — which, we should bear in mind, was quite a good stretch for all kinds of cryptos.
Nevertheless, any price slump and/or dip in trading volume warrants concern. It’ll be worth monitoring the crypto space in the coming days for signs of a revival — or, in the gloomier case, continued bearishness.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Aptos, Bitcoin, Cardano, and Solana. The Motley Fool has a disclosure policy.
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