Digital coins are now acting more like risk products than safe havens. Bitcoin and Ethereum see their price tumbling.

At this publication, Bitcoin (BTC) hovers at $47,120 after a 6% fall within the last 24 hours. Ethereum, the 2nd-largest crypto with its market cap at $454 billion, has dropped by 7% since yesterday. For now, Ether trades at $3,800.

Meanwhile, Bitcoin wavers 31% away from its record peak of $68,789, recorded on November 10. The leading digital currency stays 60% up as far as 2021 is concerned. Ether also touched its ATH on November 10, peaking near $4,859. For now, the dominant altcoin stays 21% from the all-time highs. However, the coin remains 419% up YTD.

Why BTC and ETH Stay Deep in Red?

Coinmarketcap data shows digital coins, including Ethereum and Bitcoin, hovers in the red early on Tuesday. As alternative tokens mimic price actions by BTC, it can tell the overall market direction. Meanwhile, what headwinds is Bitcoin battling at the moment?

Recent months have proven that BTC behaves like a risky product and not a haven within market uncertainty. Remember, BTC tends to lose its value whenever worldwide share markets plunge. The Omicron COVID strain and threats on growing structural inflation had investors re-evaluating riskier holdings.

Meanwhile, US markets sell-off sharply yesterday (overnight Australian time). NASDAQ closed at -1.4%. While publishing this article, S&P-ASX 200 Index remained somewhat muted with a 0.2% drop.

What Crypto Investors Need to Watch

As BTC retraced for five consecutive weeks since touching its ATH, it declined nearly level with the 200-day MA. That is a vital price level that crypto analysts keep on watching. Any considerable drop under the 200-day MA will translate to bearishness in the short-term price picture.

Addressing BTC’s ongoing volatility and the narrative by some cryptocurrency investors that Bitcoin is an inflation hedge, Bannockburn Global Forex chief market strategist Marc Chandler told Bloomberg that the idea of volatility easing has never materialized.

The experts believe Bitcoin’s volatility is high, and other supposed narratives, such as inflation hedge, appear false. Altcoins will likely follow BTC’s current moves.