Altcoins
Very bad news for ETH, IOTA, Bonk and other Altcoins
Cryptocurrency prices have fluctuated this week. Bitcoin has fallen back from this month’s high of over $72,000 to $68,000. Ethereum found resistance at $4,000 while the total market cap of all cryptocurrencies remained stuck at $2.6 trillion. Some altcoins like Pepe, Floki and Bonk have risen sharply in recent weeks. Here are the two bad news that could hurt their performance.
The Fed could keep its rates higher for longer
The first bad news that will affect cryptocurrencies is that of the Federal Reserve. Earlier this year, most analysts expected the Federal Reserve to make six rate cuts this year. Billionaire Bill Ackman expected the first reduction to take place in March.
These predictions have not come true well, as the chances of several rate cuts have faded significantly recently. Inflation, which was falling in 2023, simply stopped falling and remained stuck above 3%. The most recent data showed that headline CPI and core CPI slowed to 3.4% and 3.6%, respectively.
As a result, most Federal Reserve officials have urged caution about when rate cuts begin. FOMC members like Raphael Bostic, Mary Daly and Loretta Mester have said the Fed will depend on data to determine when rate cuts begin.
The Fed has no real reason to start cutting interest rates now since the United States is in a period of stagflation. Economic growth has stalled while inflation remains above the 2% target. Consumer confidence has rebounded while the job market is extremely strong.
Therefore, the CME Fed Rate Monitor estimates that the bank will make a rate cut at its December meeting. A cut before then could give rise to accusations that the Fed is being political as the U.S. heads to elections in November.
Analysts at Goldman Sachs and JP Morgan have even questioned the need to cut rates this year. Additionally, the Bank of England (BoE) may not cut rates in June as UK inflation slows at a slower pace than expected.
Coming drought
The other bad news is that analysts don’t expect any more major good news in the sector. The Securities and Exchange Commission (SEC) has already approved 11 Bitcoin ETFs in January. The Bitcoin halving, a major industry event, has already occurred. In most cases, BTC and other altcoins do well well before the halving event.
Finally, the SEC Approved Ethereum ETFs, another great event. Therefore, there is no major news coming that will push Ether and other cryptocurrencies higher in the coming months.
Historically, there has been a concept known as “buy the rumor, sell the information.” This explains why Bitcoin surged before the ETF was approved and halved, then went into a tight range when that happened.
Therefore, the most likely driver for cryptocurrencies like Bonk, Floki and even the upcoming Pi Coin will be the actions of the Federal Reserve. These tokens will rise if the Fed discusses possible rate cuts later this year.