The prices of several popular cryptocurrencies fell today, as the crypto winter pressed on in what have been very difficult market conditions this year.
Over the last 24 hours, the price of the meme token Shiba Inu (SHIB 1.53%) traded roughly 8% lower as of 10:58 am ET today. The price of another popular meme token, Dogecoin (DOGE 4.72%)had fallen roughly 2.5% and the price of Cardano (ADA -1.22%) was down roughly 3%.
Most cryptocurrencies fell today, including the world’s largest cryptocurrency, Bitcoin (BTC -0.74%), which traded roughly 3% lower. The price of Bitcoin as of this writing was roughly $20,117.
Similar to stocks last week, cryptocurrencies did seem to be on the rebound, but most experts do not believe the selling in the crypto market is done just yet.
“While we have seen bitcoin and ethereum rally recently after creating lows around $17,500 and $880 respectively, we are unconvinced about calling a low in place yet,” said Richard Usher of the crypto company BCB Group, according to the website NextAdvisor, a subsidiary of Time. “The general risk environment remains on a knife edge, and while we think risk assets will rally significantly toward the end of the year, we see risks skewed to one more sell-off first.”
Crypto prices and interest have struggled in the same way growth and tech stocks have, largely due to monetary policy moves by the Federal Reserve. In its effort to combat extremely high levels of inflation, the Fed has raised its benchmark overnight lending rate, the federal funds rate, very rapidly this year and more rate hikes are likely on the way. Rising interest rates make riskier assets less appealing because they increase the returns on safer assets and typically put pressure on earnings.
Because cryptocurrencies don’t generate earnings and are extremely hard to value, especially when you think about highly speculative tokens like Shiba Inu and Dogecoin, the uncertainty is more of a negative for many cryptocurrencies, in my opinion. Additionally, the Fed has begun reducing its nearly $9 trillion balance sheet in a process known as quantitative tightening, which essentially pulls liquidity out of the economy. This could have a dampening effect on funds that were previously flowing into the crypto market.
One other possible reason for the dip in Shiba Inu and Dogecoin is that earlier this week, the popular crypto website Crypto.com said it was removing 15 cryptocurrencies including Shiba Inu and Dogecoin from its Crypto Earn program. The initiative allows crypto investors to earn interest on their crypto holdings.
Unfortunately, until some of the uncertainty surrounding inflation, rate hikes, and quantitative tightening clear up, I think it will be hard for the crypto market to go on a sustained run.
While Shiba Inu and Dogecoin are firmly embedded in the crypto market now, I have never seen them as worthy investments because the two don’t have any special real-world use or any technical advantage that makes them superior to other blockchain networks.
Cardano is certainly worth a look. The network is already able to process 250 transactions per second and is aiming to be able to process potentially millions of transactions per second in the future after it makes system upgrades.