reasons behind Shiba Inu's downtrend this week
reasons behind Shiba Inu's downtrend this week
The Shiba Inu (SHIB) cryptocurrency underwent significant sell-offs this week, leading to a 10.10% dip in its value. Over the past seven days, the popular meme coin dropped by 22.7%, according to data from S&P Global Market Intelligence. However, it managed to gain 0.5% in value over the following 24 hours of trading.
The cryptocurrency market experienced a surge of sell-offs this week due to updates from the Federal Reserve. Shiba Inu was not immune to this pullback. Despite this week's significant decrease in value, the token is still up by 108% this year as of now.
The Fed Delivers Some Bearish News to Shiba Inu Investors
During its latest policy meeting on Wednesday, the Federal Reserve announced its decision to implement a 25-basis-point reduction in the benchmark interest rate, as anticipated. However, the central banking authority's outlook for 2025 was more hawkish than many investors had predicted.
Instead of projecting four rate cuts of 25 basis points in the upcoming year, the Federal Reserve now expects to deliver only two cuts of that size. Jerome Powell, the Fed Chair, announced that there was a significant amount of macroeconomic uncertainty approaching, and that the central banking authority no longer believed it was prudent to forecast four rate cuts in 2025.
Lower interest rates typically make investors less risk-averse. When borrowing money becomes cheaper, riskier growth-dependent and speculative investments become more appealing. As a result of the Fed's more cautious approach to rate policy, both cryptocurrencies and stocks experienced significant sell-offs, with high-risk investments being the hardest hit.
What's Next for Shiba Inu?
Shiba Inu and the wider cryptocurrency market have demonstrated some strong recovery momentum in response to the sell-offs that were triggered by the Fed's meeting, but it remains to be seen how the altered interest rate outlook will impact token valuations in the future. If inflation data takes a negative turn and validates the Fed's more conservative stance, the crypto market might face another wave of bearish pressures.
On the other hand, investors are hopeful that the incoming Trump administration will ease regulations and provide greater support for the crypto industry. While there are several project-specific factors that could influence Shiba Inu's performance in 2025 and beyond, it seems that macroeconomic and political factors will likely have the most significant impact on its performance.
In light of the Federal Reserve's more cautious approach to interest rate policy, which made investors more risk-averse, both cryptocurrencies and stocks experienced significant sell-offs. Shiba Inu investors might be closely monitoring finance news and considering their investing strategies, as changes in interest rates can impact the value of their digital assets.