It’s not a good day if you’re a crypto trader. All major cryptocurrencies are crashing this morning. At the time of this writing, CoinDesk is showing bitcoin is down 8%, ethereal is down 9%, dogecoin is down 8%, and Shiba Inu is down 6%. Other top cryptocurrencies are all in the red too, down anywhere from 7% to 14%.
So what’s going on? CoinDesk says that two main things could be spooking the crypto markets this morning. First, Twitter’s CFO Ned Segal said that investing the company’s cash in cryptocurrencies “doesn’t make sense right now” (via the Wall Street Journal). Segal cited the overall volatility of crypto as the reason for shunning the digital tokens. And given the way the crypto markets are reacting to his comments, the volatility argument seems solid.
But another reason cryptocurrencies are crashing today could be down to the infrastructure bill President Biden signed into law yesterday. As CoinDesk notes, that bill requires brokers to report traders who transact more than $10,000 worth of crypto to the IRS. However, the bill doesn’t fully define what a “broker” is, and many worry it could include bitcoin miners, creating tax reporting red tape.
This morning’s crypto selloff may also be spooking investors with bad memories of December 2017 to February 2018 when crypto markets were destroyed in a massive months-long selloff. As Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch, the “biggest fear among crypto traders is whether the crypto winter is here…No one wants to see another crypto winter as it is difficult to forget the dire consequences of the previous one.”
The 2017-2018 “crypto winter” saw bitcoin fall from a then all-time high of over $17,700 to a low of around $7,500 in less than two months. Bitcoin reached an all-time high of just over $68,500 last week. As of today, it is down to just over $60,400 per coin.