Cryptocurrencies remain volatile today. However, unlike much of 2024, the market is against investors today. Bitcoin (BTC) is down 2.8%, Ethereum (ETH) is down 5.2%, and Bonk (BONK) is down 9.4% as of 1:45 p.m. ET. Crypto trading 24/7 kept market speculation flowing despite a long holiday weekend in some countries.
The ISM factory index, which rose 2.5% to 50.3% in March, is the greatest market data point. Over 50% of manufacturing managers believe the market is growing. This followed 16 months of projected reductions.
This result suggests the economy is doing well despite increased interest rates in recent years, according to investors. If inflation is low and the Federal Reserve doesn't need to cut rates to boost the economy, it may not. Bond traders now estimate a June 2024 rate drop at less than 50%, which would have been surprising coming into the year. Investors expected six rate cuts but may get two quarters without.
Crypto's drop today In expectation of reduced interest rates, technology and high-growth equities and cryptocurrencies have moved higher during the previous six months. As that theory collapses, cryptocurrencies often decline.
Bitcoin ETFs also injected billions into the business. Outflows began last week, but they converted into inflows late in the week. Ethereum has also benefited from whispers that it would obtain ETFs in the coming months. This is uncertain under the current regulatory climate. Crypto values may fall if more ETFs aren't allowed.
Bonk's move mirrors the others with more volatility. Unlike Bitcoin or Ethereum, this meme coin is a popular alternative to Dogecoin and is valued for speculation.
Where does crypto go? I think 2024's major drivers are gone. Bitcoin's ETFs raised awareness and investment in crypto, boosting the industry. Economic and rate cut speculation appears overblown. That leaves fundamentals driving the crypto market, which is bad. Bitcoin may be "digital gold," but I think it's more speculative. Ethereum promised real-world use cases in finance and digital assets, but it's slow and pricey, therefore rival blockchains are gaining appeal.
Bonk's meme explosion is nice, but meme coins never last. Without a catalyst, all three cryptos might decline in the next months as investors seek fundamental value.
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