Memecoins
Popcat, Mog Coin and Bonk prices lead to losses
It was a sea of red in the crypto industry Thursday morning as Bitcoin Gold prices fell below $63,000 and Ethereum fell below $3,200. The total market capitalization of all cryptocurrencies fell by more than 3.3% to $2.3 trillion, while the Cryptocurrency Fear and Greed Index fell back to the neutral point of 57.
Meme coins lead the sale
Meme coins were the worst performers during this sale. Popcat prices fell by more than 12%, while Mog Coin, Dogwifhat, Book of Meme, and Bonk dropped by more than 10%. These tokens have slipped by more than 15% from their highs this week.
This performance is a stark reversal from what happened on Monday, when Bitcoin hit $70,000 for the first time in over a month. In most cases, meme coins tend to show more extreme moves than Bitcoin. When Bitcoin goes up, these coins jump at a faster pace and vice versa.
There are three factors that could explain this drop. First, the price of coins is falling due to the current tensions in the Middle East, where experts are warning of a prolonged war. Turkey has warned that it will intervene if Israel launches a full-scale attack on Lebanon. Iran has also vowed to retaliate after Israel killed the leader of Hamas on its territory.
In some cases, cryptocurrency prices drop sharply in the event of major geopolitical issues.
Federal Reserve Decision
Second, their crash came as investors were selling the Federal Reserve news. In its monetary policy decision, the Fed decided to leave interest rates unchanged, as was widely expected. The bank then hinted that it was monitoring its dual mandate, signaling that it would soon begin cutting rates.
The Fed’s dual role is to ensure that the United States has stable inflation and low unemployment. While inflation has continued to decline in recent months, the unemployment rate has reached its highest level since 2021. Therefore, in his statement, Jerome Powell said that the door to a rate cut in September is open.
As expected, the #Federal Reserve interest rates were left unchanged and the balance of risks was shifted in favour of less dynamism in the labour market.
Attention now turns to Chairman Powell’s press conference, where he will be asked about the likelihood of a rate cut in September.#economy…– Mohamed A. El-Erian (@elerianm) July 31, 2024
The Fed’s decision was largely beneficial for Bitcoin and other risk assets. As a result, these assets fell sharply as investors sold the news as it was in line with expectations. The last reason is that Bitcoin options are set to expire on August 2. Data from Derivative shows that this expiration will be worth more than $2.3 billion. In most cases, the price of Bitcoin falls before the expiration of a large option.