It’s too soon to say that this latest, and rather long-tail, cryptocurrency rally is over. While investors are still keen to own coins, tokens, and associated stocks, the cryptoverse as a whole was rather gloomy this week. With the decline of the leading asset in the group, more than a few meme and utility coins also felt the pinch.
One of the more enduring and popular meme coins, Shiba Inu (CRYPTO: SHIB), was whimpering with a more than 12% decline across the period, according to data compiled by S&P Global Market Intelligence. Utility crypto Polkadot (CRYPTO: DOT) suffered a similar decline. Avalanche (CRYPTO: AVAX) and Aptos (CRYPTO: APT) fared worse, with respective falls of 14% and 21%.
Where the top crypto goes, others follow
Those four titles and other altcoins more or less followed the price trajectory of Bitcoin, which also traded notably down during the week.
At least some of this had to do with comments from Federal Reserve officials, some of whom now seem hesitant to pull the lever on the series of interest rate cuts the regulator said it aimed to enact this year. All things being equal, lower rates increase the taste for riskier investments since assets considered safer pay out less than previously.
Many investors piled into those safety plays during the week. The yield on the 10-year Treasury note, considered to be a benchmark, rose by more than 9 basis points on Friday alone — a relatively high jump for the rather staid investment. Prior to that, on Wednesday it notched a new high for this year with a nearly 4.43% yield.
Meanwhile, the prices of precious metals also saw quite the lift, with one tracking index showing a 5% gain over the week. Gold, silver, and other valuable metals are traditionally popular safety investments too, and many prefer them to bonds due to what they consider to be their high inherent value.
Reasons for encouragement
So is this what some crypto-heads call a “boring low,” or is it the start of a longer and more worrying slide?
If anything, I’d bet that the growth train will restart before long. Investors might be losing patience with those rate cuts, but they are almost sure to come if the U.S. economy continues to perform robustly and inflation recedes even modestly. Cryptocurrency is a more dynamic and exciting asset class than precious metals and (especially) bonds, so we’ll probably see more than a few discount hunters park their capital into coins and tokens in the near future.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Avalanche and Bitcoin. The Motley Fool has a disclosure policy.
Why Meme and Utility Cryptocurrencies Stumbled This Week was originally published by The Motley Fool