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Why Ethereum, Solana and Cardano collapsed today


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This article was originally published on Fool.com. All figures are in US dollars, unless otherwise stated.

What happened

News in the crypto market continued to deteriorate after the removal of the binding on Tuesday TerraUSD (CRYPT: UST) from the US dollar as well as falling in bitcoin (CRYPT: BTC). This actually caused a cascade of sales and led to outright panic in some circles. And even the most useful crypto-assets are declining on Wednesday.

Noon on ET, value Etherium (CRYPT: ETH) fell 3.6% in the previous 24 hours, Salana (CRYPT: SOL) decreased by 19.9% ​​and Cardano (CRYPT: ADA) decreased by 13.2%.

And that

The biggest news of the day was that the TercoUSD stablecoin had lost its peg to the dollar. The value of this token fell to $ 0.30 or so, and as of late Wednesday was still only $ 0.63. This crisis, formerly seen as a secure asset, has created a cascade of impacts and falling prices on almost all major tokens. According to Coinglass.com, cryptocurrency positions worth $ 859 million have been eliminated in the last 24 hours alone, and if prices continue to fall, that figure is likely to rise.

When such big falls occur, a wide panic can form. Here’s what we see on Wednesday with relatively smaller market capitalization tokens such as Solana and Cardano. The sale leads to more sales, and since these tokens have no tangible assets to return to, there is no clear basis under their prices.

Ethereum, which is the main token for use in smart contracts, has actually held up relatively well, showing some strength in leading cryptocurrencies on a relative basis.

It does not help that this week the stock market is also falling. The quarterly earnings reports supplied by the companies were not as strong as some investors expected, and this leads to further “risk” of market trading. Cryptocurrencies are very risky, so in this environment, naturally, there will be many sellers.

What now

Of course, it seems that the crypto market is in a panic. Investors are in some cases liquidated, and some of the investment theses underlying cryptocurrencies are falling apart.

What is special about Ethereum, Solana and Cardano is that they are all useful tokens that allow developers to build applications based on their blockchains. And billions of dollars are flowing into the cryptocurrency development ecosystem, which will lead to innovation over the next decade or more. Over time, this should increase values, although we do not know when these benefits will be seen.

I think we are starting to see that the panic in the market is reaching its peak, and similar moments have usually come to buying large long-term assets. In cryptocurrency, I think strong tokens and blockchains will be the ones that developers use the most to provide digital or real useful tools to users. These three cryptocurrencies are at the top of this list.

However, there is likely to be more volatility ahead and it may not be the bottom. Therefore, investors who are buying now should be prepared because it is a long-term investment, and in the short term crypto trading may be unpredictable, which was demonstrated again this week.

This article was originally published on Fool.com. All figures are in US dollars, unless otherwise stated.


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