- Meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) have seen their values drop by over 10% this week.
- The fall in these coins’ prices has been attributed to broader macroeconomic trends, particularly the actions and communications from the US Federal Reserve.
- Influential statements from the Federal Reserve have instilled uncertainty in the minds of crypto investors.
This article delves into the recent price drops in Dogecoin and Shiba Inu, analyzing the role of US Federal Reserve policies and looking ahead to potential price rebounds.
The Impact of the US Federal Reserve’s Policies
Dogecoin and Shiba Inu’s recent price reductions are strongly linked to the US Federal Reserve’s stance regarding interest rates. Although the Consumer Price Index (CPI) inflation data came in below expectations and momentarily boosted the cryptocurrency market, Federal Reserve Chair Jerome Powell’s speech dashed hopes by reiterating a hawkish stance. Powell indicated that the Central Bank is not yet prepared to cut interest rates, causing widespread concern among investors.
The Federal Reserve’s decision to maintain interest rates at 5.25% to 5.5% has led to a reluctance among investors to put money into high-risk assets, including cryptocurrencies. Bitcoin, the leading cryptocurrency, experienced a significant drop following Powell’s speech, plummeting from approximately $70,000 to $66,000. As a result, meme coins like Dogecoin and Shiba Inu, which often correlate closely with Bitcoin’s movements, have also suffered notable declines.
Investor Concerns and Market Reactions
Investor sentiment has further soured due to the perception that utility tokens offer more stability compared to meme coins in the current economic climate. Data from IntoTheBlock illustrates that leading meme coins like Dogecoin and Shiba Inu still show high correlation with Bitcoin prices. Therefore, when Bitcoin’s value decreases, these meme coins are also likely to experience substantial declines.
Shiba Inu in particular has faced intensified selling pressure. Reports indicate that large holders of Shiba Inu, known as whales, transferred 4.29 trillion SHIB tokens to Coinbase, suggesting an intent to liquidate their holdings soon. This move has contributed to downward pressure on Shiba Inu’s price.
Potential For Recovery: Dogecoin and Shiba Inu’s Future
Despite the recent downturn, some crypto analysts remain optimistic about the future of Dogecoin and Shiba Inu. Known crypto analyst CrediBULL Crypto remarked that Dogecoin has reached a critical juncture. Given that Bitcoin has also hit its range lows, CrediBULL Crypto predicts that Dogecoin could bounce back if Bitcoin initiates a price reversal.
Another analyst, Kevin (formerly known as Yomi OG), also expressed a positive outlook on Dogecoin’s future. He pointed out that the 12-day time frame on the Gaussian channel has turned green on Dogecoin’s chart for the first time since December 2020. According to Kevin, this signals the potential onset of a bullish trend for Dogecoin.
Shiba Inu’s Road to Recovery
Similarly, despite significant selling pressure, Shiba Inu’s fundamentals remain promising. The burn tracking platform Shibburn reported that Shiba Inu’s burn rate surged by over 863% in the past 24 hours, which indicates decreasing token supply and could foreshadow a price rebound. This positive fundamental indicator suggests that Shiba Inu might soon experience a recovery in its market price.
Conclusion
In summary, the recent price declines in Dogecoin and Shiba Inu have been largely influenced by the US Federal Reserve’s hawkish policies and the resulting investor sentiment. However, despite the current bearish trends, analysts see potential for recovery based on technical indicators and fundamental factors. As the market continues to respond to macroeconomic signals, the next movement in these meme coins remains an area of keen interest for investors.
