Why Dogecoin and Shiba Inu Prices Plummeted and What Lies Ahead
Understanding the Recent Decline in Dogecoin and Shiba Inu Prices
In the past 24 hours, the cryptocurrency market has witnessed a significant downturn, particularly affecting Dogecoin and Shiba Inu. These popular meme-based digital currencies have experienced a drop of over 5%. This decline comes in the aftermath of a notable announcement by the Federal Reserve, which included a 25 basis point rate cut. However, the market’s reaction was not as anticipated, with Federal Reserve Chair Jerome Powell delivering a speech that cast a shadow over the future of crypto assets.
The Impact of Jerome Powell’s Speech
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Jerome Powell’s recent address suggested a cautious approach by the Federal Reserve, even in light of the rate cut. His remarks indicated a ‘hawkish’ stance, implying the possibility of fewer rate reductions in the coming year. This cautious outlook has contributed to investor skepticism, negatively impacting the sentiment towards riskier assets like Dogecoin and Shiba Inu.
Technical Analysis and Market Trends
According to crypto analyst Kevin Capital, the technical indicators for Dogecoin are currently bearish. He pointed out that a shift towards a more dovish stance by the Fed could have altered this outlook, but the current fundamentals and technicals suggest a potential further decline.
Bitcoin’s Influence on Meme Coins
The statement by Powell concerning the Strategic Bitcoin Reserve also played a role in the downturn. The Fed Chair mentioned that the US Central Bank is prohibited from holding Bitcoin and has no intentions of seeking legislative changes. This announcement led to a significant drop in Bitcoin’s value, which in turn has affected Dogecoin and Shiba Inu due to their positive correlation with the leading cryptocurrency.
Future Prospects for Dogecoin (DOGE)
Crypto analyst Kevin Capital, in a recent analysis, highlighted a bearish short-term outlook for Dogecoin. He noted a series of seven consecutive bearish candles and the failure to break above the macro .786 Fibonacci level, alongside losing the macro .5 Fibonacci on the linear chart.
Bitcoin’s Rejection and Market Sentiment
The analyst also emphasized Bitcoin’s struggle at the macro 1.703 level, indicating a bearish pattern with significant long liquidity at risk. Despite these challenges, there is still optimism for a recovery. Kevin Capital believes that the market is overreacting to Powell’s speech and anticipates that the current dip will attract buyers, viewing this as a routine market correction.
Conclusion: An Opportunity Amidst the Decline
While the current situation may appear daunting for Dogecoin and Shiba Inu investors, the broader market dynamics suggest that this could be a typical market correction. As the cryptocurrency landscape continues to evolve, investors are encouraged to stay informed and consider these fluctuations as potential opportunities for strategic investments.
