Home Latest News Why Shiba Inu, Ethereum, and Dogecoin Are Sinking Today – The Motley...

Why Shiba Inu, Ethereum, and Dogecoin Are Sinking Today – The Motley Fool

Ads

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Motley Fool Issues Rare “All In” Buy Alert
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
The cryptocurrency market is seeing another day of sell-offs today. The prices of Shiba Inu (SHIB -2.35%), Ethereum (ETH -1.90%), and Dogecoin‘s (DOGE -4.59%) tokens were losing ground in conjunction with the sell-off momentum. They were down roughly 5%, 2.1%, and 1.6%, respectively, over the previous 24-hours of trading as of 10:15 a.m. Sunday.
Nearly every top-100 cryptocurrency token has seen sell-offs over the last day of trading. In fact, excluding stablecoins, only TRON‘s token was in the green over the period.  (BTC -1.55%)
Image source: Getty Images.
Investors have been taking money off the table lately and moving out of investments that have high-risk profiles, and it’s led to major pullbacks that have shaped the overall momentum for cryptocurrencies and stocks. To put the trend in perspective, the tech-heavy Nasdaq Composite index just had its worst month since 2008, and rising bearish sentiment is also shaping trading in the crypto space. 
It’s also possible that recent comments from Berkshire Hathaway‘s CEO Warren Buffett and vice chairman Charlie Munger are factoring into the sell-off. Berkshire held its shareholder meeting in Omaha yesterday, and the executives made some scathing comments about Bitcoin and the cryptocurrency market as a whole. Speaking on the current crypto market leader, Buffett had this to say: “If you told me you owned all the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it. What would I do with it?”
While bearish comments from the two Berkshire luminaries are nothing new, it’s possible that the latest round of critiques from the pair have been particularly resonant amid the current market conditions. Worrying levels of inflation have the Federal Reserve on track to raise interest rates well above current levels before the year is out, and rising rates have typically meant a challenging backdrop for speculative investments. 
Many investors and analysts have raised the concern that rising interest rates could push the U.S. economy into recession because loans becoming more expensive will make businesses less likely to pursue new growth initiatives. The same general principle can be applied to buying stocks and cryptocurrencies. When taking on debt is cheap, some of that capital flows into relatively high-risk assets and stocks. When rates are higher, those kinds of investments typically become less attractive.
In some respects, the current macroeconomic situation is without recent historical precedent to draw comparisons to. The cryptocurrency market also remains relatively young in the scheme of things, and that makes it difficult to forecast how it will perform if economic conditions worsen significantly. 
The Department of Commerce recently published a report showing that the U.S. economy had contracted 1.4% year over year in the first quarter. Given that the Fed only implemented a 25 basis point rate increase in the middle of March, the fact that gross domestic product unexpectedly slipped in the quarter while inflation continued to run hot is concerning, and it could point to a tough backdrop for cryptocurrencies and other high-risk investments going forward. 
While Ethereum provides a blockchain network that applications and services can be built on, cryptocurrencies like Shiba Inu and Dogecoin primarily function as mediums of exchange and as speculative assets. That suggests that Ethereum’s Ether token might hold up relatively well if turbulence continues to roil the broader crypto market, but again, there’s not a whole lot in the way of historical precedent to base projections on. 
Bitcoin kicked off the cryptocurrency trend with its release back in 2009, but even the current crypto market leader didn’t start to see significant adoption until years later. Outside of the pandemic market-driven crash that occurred in March 2020, in which leading cryptocurrencies performed worse than stocks before roaring back to big gains, there’s not much to look at when it comes to determining how digital tokens might fare amid intense bearish conditions. As such, it’s probably best to move forward with the understanding that most cryptocurrencies are high-risk, high-reward investments.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Market-beating stocks from our award-winning analyst team.
Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/20/2022.
Discounted offers are only available to new members. Stock Advisor list price is $199 per year.
Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.

Market data powered by Xignite.

Ads

source

Ads
Previous articleApple Ipad Pro or Microsoft Surface Pro 8: Which is for you? – SFGATE
Next article3 Stocks To Watch In The Coming Week: Tesla, Oracle, Adobe Systems – Investing.com
He loves to share his thoughts via Internet. Associate writer at Inferse.com, his prime focus is to review latest cameras and smartphones. He is the official photographer at Inferse.