Altcoins
Bad news for ETH, IOTA, Bonk, Pi Coin and other Altcoins
Cryptocurrency prices have faltered this week. Bitcoin fell from this month’s high of over $72,000 to $68,000. Ethereum found resistance at $4,000, while the total market capitalization of all cryptocurrencies remained stuck at $2.6 trillion. Some altcoins such as Pepe, Floki and Bonk have seen a strong rise in recent weeks. Here are the two bad news that could compromise their performance.
The Fed could keep rates higher for longer
The first bad news that will affect cryptocurrencies is the Federal Reserve. Earlier this year, most analysts expected the Federal Reserve to make six rate cuts this year. Billionaire Bill Ackman predicted the first cut would occur in March.
These predictions have not worked out well as the chances of several rate cuts have dropped dramatically recently. Inflation, which had been declining in 2023, simply stopped falling and remained stuck above 3%. The latest data showed that headline and headline CPI slowed to 3.4% and 3.6%, respectively.
As such, most Federal Reserve officials have urged caution about when rate cuts will begin. FOMC members such as Raphael Bostic, Mary Daly and Loretta Mester have said the Fed will depend on data in determining when rate cuts will begin.
The Fed has no real reason to start cutting interest rates right now as the US is in a period of stagflation. Economic growth stalled while inflation remained above the 2% target. Consumer confidence has recovered while the job market is extremely strong.
Therefore, the CME Fed Rate Monitor tool estimates that the bank will make a rate cut at its December meeting. A cut before then could lead to accusations that the Fed is political as the United States goes to elections in November.
Analysts at Goldman Sachs and JP Morgan have even questioned the need for rate cuts this year. Furthermore, there are chances that the Bank of England (BoE) will not cut rates in June as inflation in the UK is decelerating at a slower pace than expected.
Drought news ahead
The other bad news is that analysts do not expect further good news in the sector. Formerly the Securities and Exchange Commission (SEC). 11 Bitcoin ETFs approved in January. The Bitcoin halving, a major event in the industry, has already happened. In most cases, BTC and other altcoins perform well before the halving event.
Finally, the The SEC has approved Ethereum ETFs, another great event. Therefore, there is no major news coming that will push Ether and other cryptocurrencies higher in the coming months.
Historically, there has been a concept known as “buy the rumor, sell the news.” This explains why Bitcoin rose before the ETF approval and halving, only to move into a narrow range when they occurred.
Therefore, the most likely driver for cryptocurrencies such as Bonk, Floki and Pi Coin IOU will be the actions of the Federal Reserve. These tokens will rise if the Fed indicates potential rate cuts later this year.