Study Shows Reasons Why Bitcoin, Ethereum, Dogecoin, Shiba Inu Plummet From Their All-Time Highs

A new study sheds light on the common phenomenon of cryptocurrency tokens experiencing sharp price declines after achieving all-time highs.

The research identifies key factors contributing to both the rise and subsequent fall of popular digital assets like Bitcoin BTC/USD, Ethereum ETH/USD, and Dogecoin DOGE/USD.

According to the study, profit-taking, declining interest, regulatory changes, and speculative hype are the primary reasons for post-ATH downturns.

Another key factor are exchange listings: for instance, Solana SOL/USD hit $260 in November 2021 after being listed on Binance, significantly increasing its visibility.

Social media influence also drives price spikes.

Dogecoin surged to $0.73 in May 2021, fueled by viral support from figures like Elon Musk.

Ethereum's ATH of $4,878 in November 2021 was largely attributed to the rise of decentralized finance and NFTs.

Market-wide bull runs also contribute, with Bitcoin reaching $64,000 in April 2021 as institutional interest skyrocketed.

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The report explains that the most common reason for sharp declines is profit-taking. Investors looking to secure gains often sell large portions of their holdings, leading to a rapid price correction.

Bitcoin's price fell from $64,000 to $30,000 in just two months in 2021 due to such selling pressure.

Fading demand after hype-driven peaks can further contribute to price declines, as can unfavorable regulation.

Shiba Inu SHIB/USD lost 80% of its value after reaching its ATH in 2021, as excitement around the token dwindled without new developments.

The study notes that China's 2021 cryptocurrency ban triggered a broad market selloff, affecting Bitcoin, Ethereum and other major assets.

Furthermore, speculative pump-and-dump cycles accelerate losses.

“Tokens that rise rapidly due to hype often face extreme volatility when investor enthusiasm fades,” the research states.

The study further states that ATHs are often unsustainable without long-term adoption and real-world utility.

While social media hype and exchange listings may fuel short-term gains, the true test of a token's value lies in its ability to maintain investor interest and innovation.

“Crypto investors need to distinguish between temporary market excitement and sustainable growth,” the study states. “Without strong fundamentals, most tokens fail to hold onto their peak valuations.”

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