Why altcoins fell again today

This could not be a banner week for cryptocurrencies, as some of the industry’s top altcoins lost value on Tuesday. The announcement of the Fed’s top issue dampened sentiment that was already sinking after the recent cryptocurrency rally.

That said, Tuesday’s losses were generally modest. Bellwether Meme Coin Dogecoin (viceroy -0.37%) Utility coins fell more than 3% in afternoon trading, while theoretically worse utility coins chain link (link -1.58%) and bitcoin cash (BCH -2.96%) They were cut by 2% and 4% respectively. apartment (appropriate 1.83%) It was in negative territory, but barely down 0.1%.

The Fed speaks and the cryptocurrency world listens.

The villains in this story are Federal Reserve Chairman Jerome Powell and Vice Chairman Philip Jefferson. On Wednesday, both signaled strongly that it was becoming less likely that the central bank would cut interest rates.

“Recent data clearly do not give us greater confidence and instead indicate that achieving that confidence is likely to take longer than expected,” Powell said at an event in Washington, DC.

Separately, Jefferson said the Federal Reserve must remain elated if inflation persists. “The work to sustainably return to 2% inflation is not over yet,” he said at a separate event.

That’s the overall mood on interest rates these days from the Federal Reserve and other government officials, according to the latest data on inflation, which showed inflation rose 3.5% in March, according to the Bureau of Labor Statistics. Unfortunately for meteor hawks, this was higher than typical economists had predicted and represented a notable uptick from February’s figures.

That in itself isn’t necessarily disappointing, but just a few months ago, hopes were much higher. At that point, after actually seeing positive inflation, Fed officials said they aimed to cut interest rates not once, but three times during the year.

harmful inflation

The Federal Reserve’s key interest rate is not the most important and final for cryptocurrency investors, but it is very important nonetheless. As interest rates rise, so do the safest securities on the market (considered government bonds).

As safe markets become more attractive, the market as a whole tends to sell riskier assets. In the past, these were technology stocks. Cryptocurrency is relevant these days. And the lower the utility of a particular cryptocurrency, the more downside potential it opens up underneath. (Dogecoin and other meme coin investors, take note!)

Many cryptocurrency bulls will continue to monitor developments along with inflation. In the end, the fight against it may be longer and more difficult than many people expected.