Why Bitcoin, Ethereum and XRP are falling in price

The instability in the cryptocurrency market continues, hitting these top three tokens.

What happened

It's been a pretty bumpy ride in the large-cap cryptocurrency world recently. Today, this volatility has continued, with Bitcoin, Ethereum and XRP all seeing dips starting in the late morning.

By 11:45 am ET, these top tokens had dropped 1,3%, 2,1%, and 5,1%, respectively, in the past 24 hours. 

A number of macro factors appear to be weighing on these top tokens, including volatility in Asian markets as well as concerns about rising interest rates and a stronger US dollar. 

For Bitcoin (find out here how to trade BTC with a safe and reliable platform such as Bitcoin Revolution), these concerns have overshadowed some short-term catalysts investors are focused on. The Central African Republic has passed a law to regulate cryptocurrencies, adopting Bitcoin and other cryptocurrencies with a focus on inclusive growth. While this news isn't necessarily as bullish as El Salvador's move to declare Bitcoin fiat currency, investors are taking note. 

Likewise, Ethereum's move towards an eventual "merger" that would take it from proof-of-work validation to proof-of-stake validation continues to provide both bullish anticipation and anxiety for some investors. This is because the Ethereum merger has been delayed, once again, signaling any kind of bullish catalyst for investors could be further away. 

XRP has now given up most of its gains from its late-January dip as investors appear to be wary of the upcoming SEC v. Ripple verdict nearing closing.

Race to the top for the Meme par excellence

Each of these top tokens has their own catalysts and idiosyncratic headwinds that investors should consider. That said, the price action in today's cryptocurrency market has really been mostly to the downside, with the exception of a few meme tokens (thanks to Elon Musk).

Like equity investors, those in the cryptocurrency market seem to be pricing in the continuing headwinds resulting from less liquidity in the market resulting from rising interest rates and quantitative tightening. Expectations that growth assets may underperform, whether true or not, are overshadowing any bullish catalyst for these top tokens once again today.

Conclusions

It's unclear whether the controversial cryptocurrency winter that many were talking about earlier this year is really over. At present, it is clear that an unfavorable monetary policy environment is likely to continue to influence valuations of riskier assets for some time. Being among the riskiest of all asset classes, cryptocurrencies can be poorly positioned for growth in such an environment.

That said, there are many reasons why long-term growth investors may remain bullish on cryptocurrencies. The technologies behind these tokens provide investors with tangible catalysts to get excited about. Consequently, it is now a question of how the market will evaluate this growth potential. Today, it appears that most investors are negative about the short to medium term outlook for this sector.