What happened
The price of popular cryptocurrency Ether (CRYPTO:ETH) has been dropping for the last month, and continued to do so today. The digital currency’s value has dropped 30% over the last month, and almost 20% in just the last week. Today, Ether ended the market trading day more than 3% lower.
So what
Of course the price drop also comes after cryptocurrencies as a group have soared in the last year. Ether is up 740% in the last 12 months and has still gained 170% year to date despite the recent swoon. Ether, along with its Ethereum platform where the cryptocurrency resides, is often lumped in with other well-known digital currencies like Bitcoin (CRYPTO:BTC) and Dogecoin (CRYPTO:DOGE). And some recent news has impacted the cryptocurrency world in general.
Image source: Getty Images.
Now what
When China’s government started cracking down on cryptocurrency mining recently, traders and investors took notice and started hitting the prices of all digital currencies. Presumably in a bid to rid the country of what the communist leadership can’t control, Chinese authorities have eliminated about 90% of cryptocurrency mining capacity in the country, according to several reports.
Some might think this could affect the use-case for cryptocurrencies, and it likely explains the downward trend seen in prices, including Ether’s. But some believe Ethereum stands out among its peers, thanks to the Ethereum blockchain platform. Many nonfungible tokens (NFTs) are part of the Ethereum blockchain, and speculative investors along with some notable names in entertainment have been driving the popularity of NFTs.
Investing in cryptocurrencies isn’t for everyone, and a daily move of 3% doesn’t really budge the needle in these volatile assets. But some think Ethereum stands out and are looking forward to the rollout of Ethereum 2.0, which may make the recent drop a time to consider a speculative investment in the cryptocurrency.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re 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.
