Panic For These 3 Crypto Currencies: Why Are Shiba Inu, Ethereum And Dogecoin Dropping Today?





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 sales momentum. They were down about 5%, 2.1% and 1.6% respectively in the previous 24 trading hours as of 10:15 AM on Sunday.

Almost all tokens in the first 100 cryptocurrenciescurrencies have seen some selling over the past trading day. In fact, with the exception of stablecoins, only the TRON token was in the green during the period. (BTC 2.07%)

And then ?

Investors have been taking money off the table lately and moving away from risky investments, leading to major downturns that have impacted the overall dynamics of cryptocurrencies and stocks. This may interest you: Cryptocurrency Price Prediction: Crypto.com, Ethereum and Solana† To put this trend in perspective, the tech-heavy Nasdaq Composite just had its worst month since 2008, and rising bearish sentiment is shaping trading in the crypto space as well.

It is also possible that recent comments from Warren Buffett, Berkshire Hathaway CEO 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 remarks about bitcoin and the cryptocurrency market as a whole. Speaking of 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 two Berkshire stars’ bearish comments are nothing new, it’s possible that the pair’s latest round of criticism has found particular resonance in current market conditions. Due to worrying inflation, the Federal Reserve is on track to raise interest rates well above current levels before the end of the year, and rising interest rates are usually synonymous with a difficult background for speculative investment.

Many investors and analysts have expressed concern that rising interest rates could push the US economy into recession, as companies will be less inclined to pursue new growth initiatives as loans become more expensive as loans become more expensive. The same general principle can be applied to buying stocks and cryptos. When taking on debt is cheap, some of that capital goes into relatively risky assets and stocks. At higher rates, these types of investments generally become less attractive.

What’s next?

In some respects, there is no recent historical precedent to refer to the current macroeconomic situation. On the same topic: The British government plans to seize cryptocurrencies to combat money laundering.† The cryptocurrency market also remains relatively young, making it difficult to predict its performance if economic conditions deteriorate significantly.

The Commerce Department recently released a report showing that the US economy shrank by 1.4% year-on-year in the first quarter. With the Fed only raising interest rates by 25 basis points in mid-March, the fact that gross domestic product fell unexpectedly during the quarter while inflation continued to rise is worrying and could forecast a difficult backdrop for cryptos and other risky investments in the global economy. future.

While Ethereum provides a blockchain network on which to build applications and services, cryptocurrencies such as Shiba Inu and Dogecoin mainly act as medium of exchange and speculative assets. This suggests that Ethereum’s Ether token could hold up relatively well if the turmoil in the broader crypto market continues to fluctuate, but again, there isn’t much historical precedent to base projections on.

Bitcoin started the cryptocurrency trend with its release in 2009, but even the current cryptocurrency market leader only started seeing significant adoption years later. Outside of the market-driven pandemic crash that occurred in March 2020, where major cryptocurrencies underperformed stocks before returning to strong gains, there isn’t much to see in determining how digital tokens might perform in intense bearish conditions. As such, it is probably best to proceed knowing that most cryptocurrencies are high-risk, high-reward investments.

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