Prices of leading cryptocurrencies, including Bitcoin (CRYPTO:BTC), Ethereum (CRYPTO:ETH), Solana (CRYPTO:SOL), and Cardano (CRYPTO:ADA) are down more than 10% in the last week and some have fallen 20% or more from their highs.

Unlike a company with a management team and financial figures, getting to the bottom of why crypto prices are moving sharply to the upside or downside takes a little more digging. Here are five reasons why crypto prices are moving lower -- and what to do about it.

Image source: Getty Images.

President Biden signed the $1 trillion bipartisan infrastructure bill into law on Monday. Certain crypto-related provisions offer some of the ways the Administration hopes to bolster tax revenue to fund both this bill and the proposed $1.75 trillion Build Back Better plan. The bill's loose definition of what exactly it means to be a crypto broker also encompasses small and large miners and other individuals or entities that aren't exactly brokers in the traditional sense.This issue circles back to regulatory fears of the U.S. government cracking down on the industry, making it less profitable and just more of a hassle overall.

There's also a provision related to transactions of $10,000 or more where social security numbers must be verified and the transaction reported to the government. This is yet another deterrent challenging decentralized finance and the crypto market overall.

Bitcoin Price data by YCharts

On Tuesday, news came in that China's National Development and Reform Commission is continuing its pursuit of a crypto crackdown. The lion's share of crypto mining currently comes from China, where crypto is seen as a direct threat to the country's fiat currency and economy. The second-largest economy's negative stance on crypto isn't exactly a positive sign for the market.

On Nov. 10, Bitcoin and Ethereum both reached all-time highs of $69,000 and over $4,800, respectively. The same day, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 6.2% over the last 12 months, representing the highest yearly increase in three decades. Since then, the dollar has been showing some strength thanks to higher-than-expected American spending across the retail sector. A stronger dollar means less inflation, which reduces the argument to invest in inflation-resistant asset classes.

Gold and high-yield dividend stocks have long been great ways to combat inflation. But cryptocurrency, especially Bitcoin, also has inflation-resistant characteristics due to a fixed maximum supply and independence from any one economy. If inflation starts heading in the other direction, then it would be a great thing for stocks and the U.S. economy, but a bad thing for crypto.

Riddled with speculation, the crypto market is also home to a lot of borrowed funds. Using margin magnifies potential gains and losses. Companies like BlockFi and Coinbase are willing to pay their users high interest rates for holding stablecoins, big-cap cryptos, and even altcoins on their platforms because they can lend out those same assets for a higher interest rate and make money on the spread. However, when prices crash and investors lack the equity to keep their accounts solvent, then the broker can forcibly issue a margin call. If the user can't add new funds into the account to bolster their equity, they may need to sell crypto at lower prices to raise cash to cover the deficit.

In the last 24 hours alone, $609 million were liquidated from over 147,600 traders, which is an average of over $4,100 per trader. That's a lot of money, gone in a hurry. Although the crypto market is still up a lot year-to-date, there have been many occurrences where liquidations caused steep sell-offs, including in the May crash which spilled into a June sell-off, and even the brief pullback in September. Simply put, the widespread use of debt by crypto traders adds fuel to the fire of a crash, but can also accelerate a boom on the upside.

The crypto market is no stranger to volatility. But few phrases evoke more fear than the threat of impending crypto winter.

Crypto winters are basically prolonged periods of stagnating or declining crypto prices. In the past, they've come one and a half to two years after a Bitcoin "halving." A Bitcoin halving is when the reward per block mined is cut in half. They occur roughly every four years. Given that the last halving was in May 2020, many predict that a crypto winter will set in sometime within the next six months.However, the reward per blocked mined is much less than it used to be, and nearly 90% of Bitcoin's supply is already in circulation. Given this backdrop, halvings should have less impact over time.

Quite honestly, it doesn't make sense for Bitcoin and other crypto prices to go through a fairly predictable cycle of bullish and bearish years as they did in the past. But because it happened the last few halvings, and there's widespread consensus that it could happen again, we could very well see a situation of "sell the rumor, buy the news."

The five reasons above all have one thing in common -- they are short-term challenges. The reality is that the long-term thesis for investing in top-tier cryptos like Bitcoin and Ethereum, or even high growth alternatives like Solana and Cardano, hasn't changed one bit.

Investing in cryptocurrencies requires a great deal of patience and risk tolerance. So far, the reward has been absolutely worth it. And given the rise of decentralized finance and more exciting projects in the crypto space, there's every reason to believe that crypto remains a great long-term investment even if we are approaching another crypto winter.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were 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.

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Does the Bitcoin, Ethereum, Solana, and Cardano Price Crash Signal Another Crypto Winter? - Motley Fool

The annual Sports Illustrated (SI) Awards have just revealed the line-up for the firms 2021 awards show that will broadcast live from the Seminole Hard Rock Hotel and Casino in Hollywood, Florida. This year, fans will be able to win a whole bitcoin from FTX as the crypto exchange has partnered with the SI Awards ultimate sports sweepstakes.

The American sports magazine owned by Authentic Brands Group, Sports Illustrated, has been a very popular magazine since its inception in 1954. Since the day SI was created, for 67 years the company has presented the Sportsman of the Year award annually. This year, the SI Awards will be hosted at the Seminole Hard Rock Hotel and Casino in Florida on Tuesday, December 7 at 8:00 p.m. (EST).

The 2021 SI Awards will also feature a sweepstakes with rewards provided by the crypto exchange FTX. Fans will have the opportunity to win a single bitcoin (BTC), tickets to the award show, hotel and airfare accommodations, and backstage passes to meet and greet with a surprise athlete. FTX has been very involved in the sports industry during the last year and sponsoring the SI Awards comes as no surprise.

FTX recently partnered with the MLB legend Shohei Ohtani, Tom Brady and Bradys supermodel wife Gisele Bndchen. The firm is an official partner of the MLB and has also acquired the naming rights to the NBA Miami Heats arena and the professional esports organization TSM. Other prominent crypto companies are also diving deep into the world of sports as Crypto.com signed a massive deal with the MMA company UFC. Crypto.com also inked a 20-year deal for the naming rights to the Staples Center, home of the Los Angeles Lakers.

FTX details in an announcement sent to Bitcoin.com News that the firm is proud to present the most prestigious award of the evening, Sportsperson of the Year. FTX further added that honoring this years winner as an athlete who best represents the spirit and ideals of sportsmanship, character, and performance. Guests that attend the event will also receive an exclusive Sports Illustrated Awards NFT through FTX US NFT Marketplace to commemorate the event.

In addition to the sweepstakes, the SI Awards will also be hosted by DJ Khaled and Cari Champion. The event will also showcase music performances by 2Chainz and DJ Irie. Other SI Awards attendees that will be in Florida will include JuJu Smith-Schuster, Lamelo Ball, Logan Paul, Rob Gronkowski, Suni Lee, Tyler Herro, Udonis Haslem, Billie Jean King, Brooks Nader, Camille Kostek, Chad Johnson, Candace Parker, DJ Carnage, Haley Kalil, and Jasmine Sanders.

The SI Awards are also produced by the firm Medium Rare, an agency dedicated to sports, celebrity, and brand-focused non-fungible token (NFT) assets. Medium Rare was behind the multi-million dollar NFT drops this year that featured the Golden State Warriors and Rob Gronkowski.

What do you think about the upcoming SI Awards and the sweepstakes that will be giving away a single bitcoin? Let us know what you think about this subject in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Sports Illustrated Awards Sweepstakes Sponsored by FTX to Give Away 1 Bitcoin Bitcoin News - Bitcoin News

Every few months or so, when Bitcoin inevitably swoons, theres another bumper crop of doomsday stories about whether the cryptocurrency is going straight to zero. This autumn, that question was entertained by The Economist, Bloomberg, and, JPMorgan Chase & Co. CEO Jamie Dimon, who called it worthless, again.

It is unclear what is gained from the near-obsessive warnings about Bitcoin. But this has not stopped Dimon, billionaire Warren Buffett, and others of their ilk from taking swipes whenever they get in front of a microphone. After deriding the cryptocurrency last month, Dimon hastened to add, I dont want to be a spokesperson; I dont care. It makes no difference to me.

But if it makes no difference, why keep banging on about it? Somewhere beneath all the crypto-pageantry and peculiar moralizing about what makes other investments legitimate while Bitcoin, according to economist Nouriel Roubini, remains merely a pseudo-asset seems to be a deep-seated and very real fear that, one day, the world will wake up and Bitcoin, along with the entire $2.6 trillion cryptoverse, will have vaporized.

Although Dimon himself appears to think that is unlikely, worries about Bitcoins long-term future are not just idle catastrophizing. Many traders, hedge fund managers, and institutional investors across Wall Street are genuinely struggling to size up cryptos systemic risks and finding that its no simple network-mapping exercise. Its the question on everybodys lips, says a director at Coinbase, a cryptocurrency platform with partners in more than 100 countries. Could this all go horribly wrong?

With institutional acceptance on the rise and ever larger amounts of capital at stake, there is indeed a hunt for cryptos Damoclean sword. Specifically, market participants dont want to finally invest in Bitcoin only to witness the long-feared cryptocalypse (as The Economist delicately puts it). For naysayers, theres clearly something about crypto that gives them an unshakable sense of impending doom. Perhaps it is the vestigial effects of the global financial crisis. They lived through it and remember it well. Why shouldnt they ask if Bitcoin is another house of cards?

In the eyes of Bitcoin evangelists, however, theres no greater risk than not hoovering up the cryptocurrency whenever the price dips. Over the past month, Bitcoin struck a fresh record high above $67,000, climbing nearly 20-fold from the pandemics lows. So much for heading to zero. This time, the cryptocurrencys rally followed the late-October launch of the first Bitcoin exchange-traded fund on the New York Stock Exchange.

The fact is, Bitcoins been one of the greatest investments that human beings have ever been able to get their hands on, says Daniel Masters, chairman of CoinShares, a digital asset investment firm based in New York, London, and the Channel Islands. Not just at the institutional level, but at the retail and disenfranchised level. If you have an internet connection, you can participate in crypto. Its made a lot of people a lot of money.

Its those foamy gains that have lured slews of institutional investors into the crypto space this year. According to a recent study by Fidelity Digital Assets, seven in ten institutional investors globally plan to diversify into digital assets in the near future, with current adoption rates among institutions in Asia at 71 percent, Europe at 56 percent, and the U.S. at 33 percent. Though those rates are expected to continue to accelerate over the next several years, this years influx of capital has led to renewed calls for an in-depth examination of the potential market risks that could deliver a crippling, if not fatal, blow to crypto.

The hand-wringing has been at its fiercest over Bitcoins possible exposure to systemic risk, both existential and otherwise. Chief among those concerns is whether a crypto crash, taking place in what is effectively a parallel, decentralized financial universe, might spill over into the traditional financial system. The fact that so many exchanges and crypto intermediaries remain offshore and unregulated continues to fan fears.

Lack of regulation also makes it nearly impossible to accurately measure the crypto markets overall leverage. In the meantime, surveys of who owns the largest Bitcoin fortunes often are reduced to guesswork. As a result, cryptos economic linkages and possible path to contagion have been hotly debated. But new research released in October by the National Bureau of Economic Research, a nonprofit, nonpartisan organization in Cambridge, Massachusetts, may shed some light.

Plumbing Bitcoin addresses with the highest-value holdings, better known as the Rich List one of the most widely followed databases in all of crypto the group found that despite the significant attention that Bitcoin has received over the last few years, the Bitcoin ecosystem is still dominated by large and concentrated players, be it large miners, Bitcoin holders or exchanges. According to the organizations findings, exchanges do play a central role in the cryptoverse, generating roughly 75 percent of real Bitcoin volume, whereas other types of activities, such as illegal transactions and mining rewards, account for a small part of the total volume. A deeper dive into Bitcoin holdings, however, showed that, collectively, it is individuals who boast the largest stockpiles.

Using algorithms developed to analyze Bitcoin addresses and wallets, NBER was able to separate addresses belonging to individuals from those linked to exchanges, investor pools, and other intermediaries. What it found was that Bitcoin balances held by intermediaries grew steadily from 2014, reaching about 5.5 million bitcoins by the end of 2020. Thats approximately one-third of the Bitcoin in circulation. Yet it was the individual Bitcoin holdings that were the most highly concentrated, tallying at about 8.5 million bitcoins by the end of 2020.

The top 1,000 investors control about 3 million bitcoins and the top 10,000 investors own around 5 million bitcoins, NBER wrote in its report last month, noting, This inherent concentration makes Bitcoin susceptible to systemic risk and also implies that the majority of the gains from further adoption are likely to fall disproportionately to a small set of participants.

These findings suggest that though newcomers to crypto would be subject to all the usual risks, they would not benefit from the same outsize gains as first movers, whose smaller, earlier initial investments likely at lower Bitcoin prices would have already had the chance to reap massive gains. Indeed, according to Chainanalysis, institutional investors who first entered the market less than a year ago, at an average price of $37,000 per Bitcoin, would bear the brunt of any heavy losses.

With more than $2 trillion at stake, a crypto cataclysm would certainly obliterate many fortunes, but it likely wouldnt raze key pillars of the financial system. I dont think theres a chance in hell that crypto is the source of any systemic financial collapse, says CoinShares Masters. Basically, all of crypto amounts to the price of Apple stock. Would the world open tomorrow if Apple was erased from the planet? Of course it would.

That doesnt mean contagion isnt possible in the future, but at the moment, the intrigue surrounding Bitcoin with its larger-than-life profile makes it seem bigger than it actually is, Masters reckons, adding, Its always punched above its weight.

Other factors dogging crypto have been, not surprisingly, worries about both over-regulation and under-regulation, each of which poses its own set of unique hazards. The same murky governance that makes it so hard to measure leverage in the crypto ecosystem has made it possible for major offshore players to sow the seeds of not just existential, but very concrete systemic risk. For much of this year, those perils coalesced around so-called stablecoins.

Investors inhabiting the worlds of crypto and traditional finance trading in both the dollar and Bitcoin, for example often rely on stablecoins, a cryptocurrency that lives on the blockchain, can be exchanged for a range of crypto assets, and is pegged to the dollar or the euro. Stablecoins are the lifeblood of crypto trading, because they grease billions of dollars of transactions that would be slower and more costly if subjected to the laborious process of converting dollars to Bitcoin. This is why concerns spread rapidly when troubles arose in the dominant stablecoin, Tether. The company had claimed its tens of billions of dollars in digital coins were fully backed by U.S. dollars but they werent.

In October, the U.S. futures market watchdog, the Commodity Futures Trading Commission, ordered Tether to cough up $41 million for making untrue or misleading statements and omissions of material fact about its U.S. dollar Tether token, which, the agency said, it had misrepresented as a stablecoin that was 100 percent backed by corresponding fiat assets. In truth, Tether had failed to disclose that reserves backing its stablecoins included unsecured receivables and non-fiat assets. The British Virgin Islandsbased company had also falsely represented that it was undertaking routine, professional audits to demonstrate it held sufficient fiat reserves at all times but it wasnt.

The CFTC simultaneously filed and settled the charges, following a closed-door meeting over stablecoins held by U.S. Treasury Secretary Janet Yellen this summer. The action against Tether marked the first time the CFTC had applied its rules to a stablecoin as a commodity, but it seems the U.S. Securities and Exchange Commission, as well as Congress, may soon move to regulate stablecoins much like U.S. bank deposits. At any rate, Tether is a cautionary tale of how easily cryptos internal plumbing can be potentially destabilized from offshore.

Just as under-regulation is seen as a risk, too much regulation or even bans on all crypto transactions and mining, as seen in China this autumn could prove calamitous. But given the decentralized, mobile, and global characteristics of crypto, any crackdown usually leads to Bitcoin activities simply shifting to a different jurisdiction. Regulation that is obstructionist or damaging, particularly in the U.S., could be stifling, says crypto enthusiast and hedge fund manager Roy Niederhoffer, founder of R.G. Niederhoffer Capital Management in New York. Or a major, concerted, global central bank effort to ban it. But ultimately, that would probably make cryptocurrencies like Bitcoin more valuable. This would especially hold true, he says, if restrictions on crypto took place alongside fears of hyperinflation.

Masters says another concern is how global banks might react to decentralized finance as its hegemony grows. The banking lobby is very strong, he notes. There is a chance crypto could be regulated out of existence. But the U.S. just approved the first crypto ETF; the U.S. is not anti-crypto. If it was, this would not be happening.

Another danger, which has lingered since the inception of Bitcoin, would be a mutiny by crypto miners. Because Bitcoins blockchain requires that decentralized miners be honest brokers for the system to function, if a single miner or a set of colluding miners gained control of 51 percent or more of the mining power in the network, it could upend Bitcoins ledger of transactions, allowing miners to alter the previously verified records. The possibility of such attacks creates systemic risks for financial stability and potentially even for national security, if a large fraction of citizens uses Bitcoin as a store of value, says NBER. It is, therefore, important to understand how concentrated the mining capacity is.

According to NBER data, the top 10 percent of miners control 90 percent of mining capacity, with just 0.1 percent, or about 50 miners, controlling close to 50 percent. It should also be noted that the network is most susceptible to a 51 percent attack when Bitcoin prices drop, as miners are then less incentivized to participate. For the past five years, NBER reports, Bitcoins mining capacity has been highly concentrated, with 60 to 80 percent of it based in China. This finding confirms anecdotal evidence.

Not all threats to Bitcoin need be dramatic or complex, though. Sometimes it just comes down to sentiment. In March 2020, when Bitcoin fell below $6,000 as the Covid-19 pandemic hammered the U.S., fomenting fears of an economic collapse and compelling many to convert their investments to cash, the cryptocurrency remained under $10,000 for months. That may be the greatest risk of all, asserts Niederhoffer. A long and growing loss of enthusiasm for crypto. People were just giving up on it.

Of course, he says, these kinds of pullbacks were also seen nearly a century ago, during the Great Depression. My grandfather was wiped out in the stock market crash of 1929, he recalls. Emotionally, he could never bring himself to buy a stock again. When the market falls apart like that, it can take a long time to recover.

Crypto has so far evaded such prolonged doldrums. Even with the pandemic, there are now more than 11,000 cryptocurrencies in existence, up from about 6,000 in 2020, according to the website CoinMarketCap. Nothing is too big to fail, says Niederhoffer, a former neuroscientist, but I suspect Bitcoins biggest critics have never used it to perform a transaction. Having that experience makes a huge difference in your comfort level and understanding Bitcoins importance.

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Is Bitcoin Too Big to Fail? - Institutional Investor

While business and world leaders have struck new agreements on the energy transition at the COP26 climate summit in recent days, bitcoin (BTC-USD) has sustained a sky-high price above $61,000.

But concern over the energy-intensive process of bitcoin mining, which requires high-powered computers sometimes deployed on an industrial scale, has drawn scrutiny to the environmental impact of the world's largest cryptocurrency.

In a new interview, Tom Steyer a hedge fund billionaire and environmental advocate described bitcoin as a "huge user of electricity," contending the cryptocurrency will remain an environmental threat as long as the energy grid depends on fossil fuels.

Steyer sharply criticized bitcoin mining ventures that seek out cheap, dirty energy in order to maximize profits.

"Someone came up to me with a proposal this is probably four months ago, so not that long ago [asking] did I want to invest in a bitcoin mining operation next to a coal plant?" he says.

"The idea being you don't have to transport the coal it's much cheaper [and] we'll be able to create bitcoin at a big spread to the current price. This is a great money making opportunity. That is a disaster. That is a straight up disaster," he says.

Bitcoin mining, the process that records transactions and brings new bitcoins into circulation, demands miners solve complex math problems using advanced computation. In exchange, they receive a portion of bitcoin as a reward, making the task potentially lucrative, especially as the price of bitcoin continues to climb.

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An analysis conducted by Cambridge University, released in February, found bitcoin mining consumes 121.36 terawatt hours a year of energy, which amounts to more than that consumed by Argentina, or more than the consumption of Google, Apple, Facebook, and Microsoft combined.

The global landscape of bitcoin mining shifted dramatically in May, when China banned the practice. Once the world's top home for bitcoin miners, China ceded that role to the U.S., which as of last month hosted over 40% of bitcoin mining.

In the U.S., bitcoin remains largely unregulated. But top officials in the Biden administration have moved toward new rules for cryptocurrrency in recent months.

Treasury Secretary Janet Yellen has urged speedy adoption of rules for stablecoins, a form of cryptocurrency that pegs its value to a commodity or currency, like the U.S. dollar. Plus, SEC Chair Gary Gensler has described the crypto market as the "wild wild West" and indicated a desire to regulate it.

It remains unclear whether such regulations would affect cryptocurrency's environmental impact.

"Bitcoin is a huge user of electricity," Steyer says. "So to the extent that that electricity is derived from fossil fuels, and is emitting greenhouse gases and other dangerous toxins, then yeah, it's a problem."

Political activist Tom Steyer speaks during the "Need to Impeach" town hall event at the Clifton Cultural Arts Center, Friday, March 16, 2018, in Cincinnati. (AP Photo/John Minchillo)

Steyer rose to prominence as the founder and senior managing member of hedge fund Farallon Capital Management, which he departed in 2012. Since then, he launched the voter engagement organization NextGen America and became a leading advocate on environmental issues.

Speaking to Yahoo Finance, Steyer noted that the issue of bitcoin's environmental impact ultimately comes down to the transition toward the sustainable generation of electricity.

"The real question is when you think about it: Clean up the electricity generation, electrify everything. Be smart about your energy use. That's kind of the overall take on how we reduce emissions," he says.

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Eric Adams speaks at the Mayor Elect Eric Adams Celebration Party at Zero Bond on November 2, 2021 in New York City.Photo: Eugene Gologursky (Getty Images)

Eric Adams wants to be paid in bitcoin, according to a new tweet from the incoming New York mayor. But theres one little catch: Adams says he wants just his first three paychecks in the worlds most popular cryptocurrency.

In New York we always go big, so Im going to take my first THREE paychecks in Bitcoin when I become mayor, Adams tweeted on Thursday.

NYC is going to be the center of the cryptocurrency industry and other fast-growing, innovative industries! Just wait! Adams continued.

Why only his first three paychecks? That part isnt clear. But if we had to guess, its because trading bitcoin is a highly volatile activity with a price that can swing wildly from day to day. For example, the price of bitcoin this morning is $62,079, yet bitcoin had a price of $64,066 just a couple of days ago. And those huge price swings are precisely why crypto makes a pretty shitty currency.

Adams isnt the only mayor of a large city staking his claim in the world of cryptocurrencies. The Republican mayor of Miami, Francis Suarez, said on Tuesday hes planning to take his next paycheck in bitcoin. But youll notice Suarez isnt swearing off fiat money entirely. Guys like Adams and Suarez can afford to take one or three paychecks in crypto since theyre not living paycheck to paycheck.

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How will it work to get paid in bitcoin? That part isnt completely clear yet. Since most payroll departments in the U.S. are only set up to pay people in American dollars, someone from the city would presumably need to go buy bitcoin on a service like Coinbase or Binance before transferring it to Adams. And the exact time they bought the bitcoin would be crucial, since the price fluctuates not just day to day, but minute to minute.

Adams, a Democrat and former cop, won the mayoral election in New York on Tuesday in a landslide, beating his Republican challenger Curtis Sliwa with 66.5% of the vote compared to Sliwas 28.8%, according to the New York Times.

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New York's Incoming Mayor Wants to Be Paid in Bitcoin (At Least Temporarily) - Gizmodo