Bitcoin value dropped below the $40,000 mark in today’s morning trading.
The popular cryptocurrency sold sharply this morning, while rival tokens like ether also lost value. Currently worth $39,831 per currency, bitcoin is discounted 4.3% and ether 5.1%, according to Coinbase data.
While it’s always risky to cover price changes in the world of cryptocurrencies, the drop in bitcoin value has crossed the notable threshold for material. Yahoo Finance indicates that bitcoin’s recent all-time high saw trading in cryptocurrencies reach $68,789.62 per currency. Today’s price puts the current bitcoin downgrade at just over 42%.
That’s twice the swing required for bitcoin to enter a technical bear market and four times what it would take to meet the requirements of a correction.
But falling prices in the value of certain cryptocurrencies are not slowing down the decentralized world. Publication focused on cryptography The Block observed this morning that NFT trading volumes on the popular OpenSea market are strong to start the year. Thus, web3 activity looks strong on some measures despite recent price drops; whether today’s settlement will have an impact on NFT trading activity, to take this specific example, is still unclear.
For other cryptocurrency market participants, the liquidation could hurt short-term results. There is a historical and positive connection between rising cryptocurrency prices and trading volumes. Companies like Coinbase and others make their daily living from trading fees, which means that falling cryptocurrency prices are often too low for their financial performance. Of course, the past isn’t a perfect predictor of the future, but today’s sell-off isn’t exactly optimistic.
Cryptocurrencies aren’t the only volatile asset trading lower this morning: technology stocks as a whole are down 1.81% (Nasdaq Composite), while software stocks are down an even more painful 2.62% (WisdomTree Cloud Computing Fund).