What happened ?
The cryptocurrency market is experiencing another day of short selling today. Shiba Inu (SHIB -0.81%), Ethereum (ETH 1.99%) and Dogecoin (DOGE -1.01%) token prices lost ground along with the selling momentum. They were down about 5%, 2.1% and 1.6%, respectively, in the previous 24 hours of trading as of 10:15 a.m. Sunday.
Almost all tokens in the first 100 crypto-currencies have seen some selling during the last trading day. In fact, excluding stablecoins, only the TRON token was in the green over the period. (BTC 2.07%)
So what ?
Investors have taken money off the table lately and moved away from high-risk investments, leading to large pullbacks that have influenced the overall dynamics of cryptocurrencies and stocks. This may interest you: Cryptocurrency Price Prediction: Crypto.com, Ethereum, and Solana. To put this trend into perspective, the tech-heavy Nasdaq Composite just had its worst month since 2008, and rising bearish sentiment is also shaping trading in the crypto space.
It is also possible that recent comments by Warren Buffett, CEO of Berkshire Hathaway, and Charlie Munger, Vice Chairman of the Board, play a role in this sales movement. Berkshire held its shareholder meeting in Omaha yesterday, and executives made scathing comments about bitcoin and the cryptocurrency market as a whole. Speaking about the current cryptocurrency market leader, Buffett said, “If you told me you own all the bitcoin in the world and offered it to me for $25, I wouldn’t take it. What would I do with it? »
While the bearish comments from the two Berkshire luminaries are nothing new, it’s possible that the pair’s latest round of criticism has had particular resonance in current market conditions. Due to worrying levels of inflation, the Federal Reserve is on track to raise interest rates well beyond current levels before the end of the year, and rising rates are usually synonymous with a backdrop difficult for speculative investments.
Many investors and analysts have expressed concern that rising interest rates could push the U.S. economy into recession, as with loans becoming more expensive, companies will be less inclined to pursue new growth initiatives. The same general principle can be applied to buying stocks and cryptos. When getting into debt is cheap, some of that capital goes into relatively risky assets and stocks. When rates are higher, these types of investments generally become less attractive.
In some respects, the current macroeconomic situation is without recent historical precedent to refer to. On the same subject : The UK government plans to seize cryptocurrencies to combat money laundering.. The cryptocurrency market also remains relatively young, making it difficult to predict its performance should economic conditions deteriorate significantly.
The Commerce Department recently released a report showing that the US economy contracted 1.4% year-on-year in the first quarter. Given that the Fed only raised rates by 25 basis points in mid-March, the fact that gross domestic product unexpectedly declined during the quarter, while inflation continued to surge, is concerning and could portend a difficult backdrop for cryptos and other high-risk investments in the future.
While Ethereum provides a blockchain network on which applications and services can be built, cryptocurrencies like Shiba Inu and Dogecoin primarily function as mediums of exchange and speculative assets. This suggests that Ethereum’s Ether token could hold up relatively well if turmoil continues to rock the broader crypto market, but again, there isn’t much historical precedent to base projections on.
Bitcoin kicked off the cryptocurrency trend with its release in 2009, but even the current cryptocurrency market leader didn’t begin to see significant adoption until years later. Outside of the market-induced pandemic crash that occurred in March 2020, in which major cryptocurrencies underperformed stocks before returning to strong gains, there is not much -thing to see when determining how digital tokens might perform in intense bearish conditions. As such, it’s probably best to go ahead knowing that most cryptocurrencies are high-risk, high-return investments.
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Panic for these 3 crypto-currencies: Why are Shiba Inu, Ethereum and Dogecoin sinking today? – Mag Mirror
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