Altcoins
Why Altcoin prices were falling this week
The crypto market needs one or more drivers to push prices up, and over the past few days, it really hasn’t had one.
In the crypto world, very often when the leader goes in a particular direction, the followers copy the movement. With the price decline of its leader in recent times, the values of many altcoins have also headed south in recent days.
Many altcoins were down noticeably since the start of the week as of Friday morning, some at double-digit percentage rates. According to data compiled by S&P Global Market Intelligencefor example, coin Shiba Inu (SHIB 5.38%) was down almost 9% and Coat (CRYPTO:MNT) was floating down 10%. Doing a little better but still in the red, Toncoin (TONNE 12.19%), 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. On Monday, the price of the flagship cryptocurrency began to decline and the next day it fell below $60,000. As of this writing, it’s still there, although the price has improved at least slightly. Whenever Bitcoin rises above or falls above a convenient round number like $60,000, altcoin investors tend to buy or sell these assets, depending on the direction of travel.
This started happening just before Federal Reserveat the last meeting of the Open Market Committee, it is therefore not surprising that the market is nervous. The latest consensus among Fed officials is that it is prudent not to cut interest rates, following recent worse-than-expected inflation numbers. Holders of risky assets, such as cryptocurrencies, hoped that the previously stated target of lower rates would be achieved if inflation fell.
Holding rates steady on Wednesday, Fed Chairman Jerome Powell said it would take more time for the regulator to feel confident about rate cuts. This took the breath away from more than a few crypto investors.
With such moves now looking more like a distant dream, there was little other substantial news to drive up coin and token prices – this is a market that tends to trade robustly (and therefore to move prices substantially) when big news occurs. There were no such big articles over the past few days, so some people traded cryptos to other promising assets.
Is it already time to hunt for bargains?
Investors shouldn’t get too obsessed with interest rate cuts, however.
Ultimately, the strength of any cryptocurrency is that it is perceived to provide, for example, a store of value (Bitcoin), utility as a digital asset affiliated with a popular social media site (Toncoin) or a fun coin. anchoring a blockchain that its developers are trying to transform into a robust and functional ecosystem (Shiba Inu). Believers in the missions of these cryptos would therefore do well to stay the course.
Eric Volkman has positions in Bitcoin. The Motley Fool posts and recommends Bitcoin. The Motley Fool recommends TON. The Mad Motley has a disclosure policy.