What happened
The broader cryptocurrency market is seeing another day of bearish momentum. Polygon's (CRYPTO:MATIC) MATIC digital currency token was down by roughly 15% over the previous 24 hours of trading as of 4 p.m. ET on Thursday. Meanwhile, crypto-focused companies Silvergate Capital (NYSE:SI) and Riot Blockchain (NASDAQ:RIOT) also got hit hard, falling roughly 12% and 9.7% on the day, respectively.
Bitcoin and Ethereum are experiencing some significant sell-offs, down roughly 6.6% and 7.5% over the last day. That momentum has extended to top altcoins and stocks with major exposure to the cryptocurrency space, and it looks like more volatility may be in the cards.
Image source: Getty Images.
The overall crypto space has posted fantastic growth across 2021, with leading tokens delivering stellar returns for investors who held on across the stretch. But the market has been displaying elevated volatility lately, and multiple catalysts are shaking up cryptocurrency pricing.
The regulatory climate has been a driving narrative force behind token sell-offs recently as investors weigh whether new regulations, recently passed laws, and potential future legislation will create headwinds for crypto. China led the regulatory charge earlier in the year by introducing new guidelines that banned cryptocurrency trading, mining, and transactions, and it has continued to roll out enforcement mechanisms that have spooked investors. India has also introduced legislation that could effectively ban the trading and use of all cryptocurrencies within its borders.
Similar pressures also appear to be mounting in the U.S. as well. President Biden's recently passed infrastructure bill includes provisions that will tax cryptocurrency trades, and based on comments from the leaders of regulatory agencies and calls from legislators for new governing standards and tax designations on digital currencies, these assets are looking riskier. On Wednesday, CEOs of cryptocurrency trading and services companies testified before the House Financial Services Committee, and the tone and content of that session pointed toward possible new regulations that could adversely impact token valuations.
High volatility has been the norm in the crypto space since its inception, and that doesn't appear likely to change any time in the near future. In addition, cryptocurrency prices are heavily impacted by cyclical trends. Silvergate Capital is down roughly 27% over the last month, while Riot Blockchain is down roughly 30.5%. On the other hand, Polygon's MATIC token is actually up by roughly 17%.
However, it's important to put recent pricing trends in context. Despite those sell-offs, Bitcoin's price per token is still up roughly 72% year to date. Silvergate Capital and Riot Blockchain have posted strong gains as well.
SI data by YCharts
MATIC has been on an even more impressive run -- the token is up roughly 12,000% year to date.
Investors looking at cryptocurrency-related investments should keep their personal tolerance levels for risk and volatility firmly in mind. Bitcoin has gained credibility as a store of value, which has helped power gains for crypto-based stocks including Silvergate Capital and Riot Blockchain. MATIC has gained appeal because its underlying blockchain network can provide services that augment the functionality of the Ethereum network.
Cryptocurrencies have come to be viewed as potential hedges against inflation, and are useful for decentralized finance, gaming, and non-fungible token (NFT) applications. In that sense, the fundamental value cases for crypto and blockchain-based projects seem to have improved significantly. However, investors should proceed with the understanding that there are significant risk factors that could trigger additional crypto sell-offs.
This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Excerpt from:
Why Polygon, Silvergate Capital, and Riot Blockchain Are Getting Crushed Today - The Motley Fool
- Blockchain: The Complete Guide | WIRED - February 6th, 2018 [February 6th, 2018]
- What Is Blockchain Technology? - cbinsights.com - February 6th, 2018 [February 6th, 2018]
- 7 Ways Blockchain Will Enable Entrepreneurs in 2018 | Inc.com - February 6th, 2018 [February 6th, 2018]
- Blockchain technology | Microsoft Azure - March 26th, 2018 [March 26th, 2018]
- Blockchain Wallet on the App Store - itunes.apple.com - May 5th, 2018 [May 5th, 2018]
- Bitcoin and Blockchain - Bloomberg - May 5th, 2018 [May 5th, 2018]
- Blockchain - The Daily Reckoning - May 5th, 2018 [May 5th, 2018]
- BIS show London - Blockchain Conference London | FinTech ... - July 14th, 2018 [July 14th, 2018]
- 2018 Bahamas Blockchain & Cryptocurrency Conference - July 27th, 2018 [July 27th, 2018]
- WORLD BLOCKCHAIN CONFERENCE - August 20th, 2018 [August 20th, 2018]
- Azure Blockchain Workbench | Microsoft Azure - September 29th, 2018 [September 29th, 2018]
- Crypto Guru on Bitcoin, ICOs, Blockchain, ETFs, & More ... - September 29th, 2018 [September 29th, 2018]
- Dot Blockchain Media - September 29th, 2018 [September 29th, 2018]
- 75 banks join JPMorgan-led blockchain payment project ... - September 29th, 2018 [September 29th, 2018]
- Walmart will use blockchain to ensure the safety of leafy greens - September 29th, 2018 [September 29th, 2018]
- Malta wants to become 'Blockchain Island' - September 29th, 2018 [September 29th, 2018]
- Walmart is betting on the blockchain to improve food safety ... - September 29th, 2018 [September 29th, 2018]
- From Farm to Blockchain: Walmart Tracks Its Lettuce - September 29th, 2018 [September 29th, 2018]
- The Truth About Blockchain - Harvard Business Review - October 2nd, 2018 [October 2nd, 2018]
- Blockchain.io | Your Gateway to the Internet of Value - October 17th, 2018 [October 17th, 2018]
- Blockchain Whispers: The Most Accurate Crypto Signals - December 8th, 2018 [December 8th, 2018]
- MLG Blockchain - Expert Blockchain Consulting & Development - December 10th, 2018 [December 10th, 2018]
- What Is The Blockchain? - Pixel Privacy - December 27th, 2018 [December 27th, 2018]
- Blockchain Wallet: Bitcoin on the App Store - January 13th, 2019 [January 13th, 2019]
- The Ultimate Guide To Understanding What A Blockchain Is ... - March 20th, 2019 [March 20th, 2019]
- Amazon Managed Blockchain - March 20th, 2019 [March 20th, 2019]
- What Is Blockchain? The Complete WIRED Guide | WIRED - March 20th, 2019 [March 20th, 2019]
- Symmetry - March 28th, 2019 [March 28th, 2019]
- What is Blockchain Technology? A Beginners Guide - April 18th, 2019 [April 18th, 2019]
- Yosemite X uses blockchain tech to shorten payments trip ... - April 20th, 2019 [April 20th, 2019]
- BitcoinSVs blockchain is struggling with its enormous 128MB ... - April 20th, 2019 [April 20th, 2019]
- Jimmy Song discusses Bitcoin, blockchain, and the crypto space - April 20th, 2019 [April 20th, 2019]
- Blockchain on AWS - May 5th, 2019 [May 5th, 2019]
- Blockchain Login Blockchain - June 7th, 2019 [June 7th, 2019]
- German telecom giant hires blockchain professor hopefully, its a good thing - The Next Web - September 25th, 2019 [September 25th, 2019]
- Israeli Startup Creates Offline Wallet With Access to the Blockchain - CoinDesk - September 25th, 2019 [September 25th, 2019]
- Overstock seeks blockchain stock registration with SEC - CoinGeek - September 25th, 2019 [September 25th, 2019]
- Telefnica Making Provisions Not To Miss The Blockchain Boat - Forbes - September 25th, 2019 [September 25th, 2019]
- Verizon and Wells Fargo Are Getting on the Blockchain - Market Realist - September 25th, 2019 [September 25th, 2019]
- Blockchain Mortgages Could Help The Impending Recession - Forbes - September 25th, 2019 [September 25th, 2019]
- The Smartest Way to Buy Blockchain Stocks - Zacks.com - September 25th, 2019 [September 25th, 2019]
- Vodafone litters London with blockchain tokens in new augmented reality game - The Next Web - September 25th, 2019 [September 25th, 2019]
- 5 Enterprise Blockchain Stories of the Week - Forbes - September 25th, 2019 [September 25th, 2019]
- ternity Partners with Uruguay Can to Track Cannabis Production on the Blockchain - GlobeNewswire - September 25th, 2019 [September 25th, 2019]
- Putting blockchain technology to good use - ComputerWeekly.com - September 25th, 2019 [September 25th, 2019]
- Blockchain simplified: How it eliminates the middleman - Big Think - September 25th, 2019 [September 25th, 2019]
- Building On Blockchain Without Code: Proxeus Goes Live - PRNewswire - September 25th, 2019 [September 25th, 2019]
- Googles Quantum Computing Breakthrough Brings Blockchain Resistance Into the Spotlight Again - Forbes - September 25th, 2019 [September 25th, 2019]
- Five things to know about blockchain and CRE - REjournals.com - September 25th, 2019 [September 25th, 2019]
- Blockchain Technology Is Already Improving Lives At 22 Hospitals - Forbes - September 25th, 2019 [September 25th, 2019]
- How Blockchain Is Changing The Game For Social Impact Initiatives - Forbes - September 25th, 2019 [September 25th, 2019]
- The Shift Toward Decentralized Finance: Why Are Financial Firms Turning To Crypto? - Forbes - October 1st, 2019 [October 1st, 2019]
- Could Blockchain Revolutionize the Real Estate Industry? - RisMedia.com - October 1st, 2019 [October 1st, 2019]
- Cross Reality And Blockchain - A New Era Of The VR Industry - Forbes - October 1st, 2019 [October 1st, 2019]
- Vontobel to offer structured product using blockchain technology - Investment Europe - October 1st, 2019 [October 1st, 2019]
- MineRP to partner with Karuschain to adopt blockchain platform - Mining Technology - October 1st, 2019 [October 1st, 2019]
- Stellar Development Foundation proposes to disable inflation mechanism from its protocol - The Block Crypto - October 1st, 2019 [October 1st, 2019]
- BurstIQ raises $5.5M to bring blockchain to the healthcare space - VatorNews - October 1st, 2019 [October 1st, 2019]
- Blockchains Next Frontier: Saving the Planet (and Possibly Pandas, Too) - Observer - October 1st, 2019 [October 1st, 2019]
- Mark Cuban bullish on blockchain, but would take bananas over bitcoin - The Block Crypto - October 1st, 2019 [October 1st, 2019]
- Energy Industry Blockchain Landscape - The National Law Review - October 1st, 2019 [October 1st, 2019]
- US Homeland Security grants blockchain credentialing contract to Danube Tech - Ledger Insights - October 1st, 2019 [October 1st, 2019]
- U Wyoming Spurs Blockchain Development with Hackathon 'Stampede' - Campus Technology - October 1st, 2019 [October 1st, 2019]
- How the blockchain is inspiring organizational design - Quartz - October 1st, 2019 [October 1st, 2019]
- Blockchain At The United Nations Leading Solutions To The Global Crisis - Forbes - October 1st, 2019 [October 1st, 2019]
- Exploring cryptocurrency and blockchain in Iceland - Penn: Office of University Communications - October 1st, 2019 [October 1st, 2019]
- Will Facebook's Libra Overtake Bitcoin Cryptocurrency And The Ethereum Blockchain? How Will It Work? - Forbes - October 1st, 2019 [October 1st, 2019]
- Overstock.com Hones In On Blockchain Identity With Medici Ventures And Evernym Partnership - Forbes - October 1st, 2019 [October 1st, 2019]
- How Blockchain Is Affecting The Marketing And Advertising Industry - Forbes - October 1st, 2019 [October 1st, 2019]
- Japanese Messaging App LINE Positioning Itself As Leader In Blockchain and Crypto Space - Forbes - October 1st, 2019 [October 1st, 2019]
- Could Blockchain Help the Cannabis Industry? Were About to Find Out - Observer - October 1st, 2019 [October 1st, 2019]
- Energy Blockchain Applications Expected to Experience a 67% CAGR - Transmission & Distribution World - October 24th, 2019 [October 24th, 2019]
- Blockchain Technology is Disrupting the Startup Ecosystem - Times of India - October 24th, 2019 [October 24th, 2019]
- Is blockchain the answer for sustainability in the cocoa sector? - ConfectioneryNews.com - October 24th, 2019 [October 24th, 2019]
- Blockchain voting is vulnerable to hackers, software glitches and bad ID photos among other problems - The Conversation US - October 24th, 2019 [October 24th, 2019]
- Blockchain is not the only solution for better and faster payments - Euromoney magazine - October 24th, 2019 [October 24th, 2019]
- Can blockchain restore trust to the fund management and audit industries? - Accountancy Age - October 24th, 2019 [October 24th, 2019]
- Smart contracts and blockchain will provide needed trust, says Princeton professor - TechRepublic - October 24th, 2019 [October 24th, 2019]
- Gartner IT Symposium/Xpo 2019: Blockchain strategy must evolve at the same pace as technology - TechRepublic - October 24th, 2019 [October 24th, 2019]
- Binance CEO: Putin Is the Most Influential Person in Blockchain - Cointelegraph - October 24th, 2019 [October 24th, 2019]