Altcoins
Why Altcoins Were Sliding Again Today
This isn’t shaping up to be a banner week for crypto, as some of the top altcoins in the space lost value on Tuesday. A statement on a major issue from the Federal Reserve dampened sentiment, which was already sinking after the recent rally in cryptocurrencies.
That being said, Tuesday’s losses were, overall, not massive. Bellwether coin Dogecoin (CRYPTO:DOGE) was down more than 3% by late afternoon, while the theoretically more serious utility coins Chain link (CRYPTO: LINK) and Bitcoin Cash (CRYPTO: BCH) lost 2% and 4% respectively. Aptos (CRYPTO:APT) was also in negative territory, but just barely, as it was down 0.1%.
The Fed speaks and the crypto world listens
The bad guys, if you will, in this story are Fed Chairman Jerome Powell and Vice President Philip Jefferson. On Wednesday, both strongly indicated that the likelihood of the central bank cutting its key interest rate was declining.
Speaking at an event in Washington, D.C., Powell said: “Recent data clearly has not given us greater confidence and instead indicates that it will likely take longer than expected to achieve this confidence. »
Furthermore, Jefferson believed that the Fed should keep its powder dry if inflation persisted. At another event, he said: “The work to sustainably restore 2% inflation is not yet finished.”
That’s the general mood regarding interest rates these days from the Fed and other government officials following the latest inflation data, which the Bureau of Labor Statistics says has risen by 3.5% in March. Unfortunately for rate hawks, this figure was higher than economists’ usual forecasts and represented a notable increase from February’s figure.
This wouldn’t necessarily be discouraging in itself, but just a few months ago hopes were much higher. At that time, following positive inflation developments, Fed officials said they intended to make not one, not two, but three cuts. rate during this year.
Harmful inflation
Fed key interest rates are not the be-all and end-all for crypto investors, but they are crucial nonetheless. When rates rise, the safest securities in the market (considered government bonds) rise as well.
When security plays become more attractive, the market as a whole tends to sell off the riskier assets. In the past, these were technology stocks; These days, cryptos do the trick. And the less useful a particular cryptocurrency is, the more downside potential opens up below it. (Attention, Dogecoin and others piece of money investors!)
The story continues
Many crypto bulls will continue to monitor inflation developments. After all, the battle against this scourge could be longer and more difficult than expected.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool posts and recommends Chainlink. The Mad Motley has a disclosure policy.
Why Altcoins Were Sliding Again Today was originally published by The Motley Fool