Altcoin
Why Altcoin Prices Dropped This Week
The cryptocurrency market needs one or more stimuli to push prices up, and it hasn’t gotten any in recent days.
In the world of cryptocurrencies, very often when the leader goes in a particular direction, the followers copy the move. With the price of its leader dropping lately, the values of many altcoins have also headed lower in recent days.
Numerous altcoins have fallen significantly year-to-date as of early Friday morning, some by double-digit percentage rates. According to data compiled by S&P Global Market Insightsfor example, meme coin Shiba Inu (SHIB -5.14%) had fallen by almost 9% and Coat (CRYPTO:MNT) was floating down 10%. It was doing a little better, but it was still in the red Toncoin (TONNE -0.11%), with a relatively modest decline of 0.4%.
Patience is a virtue for interest rate hawks
The market leader I’m talking about is, of course, Bitcoin. The price of the cryptocurrency started to decline on Monday and fell below $60,000 the next day. As of this writing it’s still there, although the price has improved at least marginally. Whenever Bitcoin crosses or surpasses a useful round number like $60,000, altcoin investors tend to buy or sell those assets, depending on the direction of travel.
This started happening just before Federal Reserveof the last meeting of the Open Market Committee, so it is no wonder that the market was nervous. The latest consensus among Fed officials is that it is prudent not to cut interest rates in the wake of recent worse-than-expected inflation data. There was hope among holders of risky assets, such as cryptocurrencies, that the previously stated goal of cutting rates would be realized if inflation fell.
Holding rates steady on Wednesday, Fed Chair Jerome Powell said more time would be needed for the regulator to feel confident about rate cuts. This has taken the wind out of the sails of more than a few cryptocurrency investors.
As such moves now seem more like a distant dream, there was little other substantive news to move coins and tokens higher in price – this is a market that tends to trade robustly (and therefore move prices substantially) when big news happens. There have been no such major articles these days, so some people have been exchanging cryptocurrencies for other promising assets.
Is it time to go bargain hunting already?
However, investors should not get too fixated on interest rate cuts.
Ultimately, the strength of any cryptocurrency is what it is perceived to bring to the table, for example, as a store of value (Bitcoin), a utility as a digital asset affiliated with a popular social media site (Toncoin), or a fun meme coin. by anchoring a blockchain its developers are trying to transform it into a robust and functional ecosystem (Shiba Inu). Those who believe in the mission of these cryptocurrencies, therefore, might do well to stay the course.
Eric Volkmann has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool recommends TON. The Motley Fool has a disclosure policy.