Market Correction Hits Dogecoin, Polkadot, and Chainlink Hard

Why Are Dogecoin Polkadot and Chainlink Prices Dropping?

Currently, these three large-cap coins are experiencing the negative consequences of selling pressure brought on by uncertainty.
What went down is this:

Losses are being witnessed across the board on what is turning out to be yet another day of significant correlation between cryptocurrencies and the equities counterparts they represent. The whole cryptocurrency market was down around 2% as of midday Eastern Time (ET), which is a larger loss than the aggregate losses witnessed in most equity indices today.

Bearish Trend for Dogecoin, Polkadot, and Chainlink: Experts Analyze
Dogecoin, Polkadot, and Chainlink See Losses: What’s Driving the Correction

Nevertheless, it is important to call attention to the fact that certain high-cap tokens are now performing poorly. The 24-hour falls for Dogecoin (DOGE -4.82%), Polkadot (DOT -8.40%), and Chainlink (LINK -7.55%) was larger than the declines recorded in the overall market. Dogecoin, Polkadot, and Chainlink all saw declines of 3.2%, 4.2%, and 3.8%, respectively.

The sharp increase in value that each of these three tokens—and the cryptocurrency market as a whole, for that matter—have witnessed over the past few weeks can be held partially responsible for this movement. The price of dogecoin has increased by more than twenty percent as a result of yet another positive tweet from Elon Musk.

The surge by Polkadot, which is up 45% year-to-date, has been motivated by a number of causes, one of which is an intriguing analysis conducted by Polkadot’s parent firm, Web3 Foundation, which says that DOT is not a security. And Chainlink has received a lot of support from cryptocurrency analysts, which is related to wider blockchain development measures and has led to a gain of 26% so far this year.

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As a result, the loss that occurred today seems to be the product of a larger decline in mood, which is being felt more today by higher-risk assets. Investors are bracing themselves for what could be a more hawkish stance from the Federal Reserve compared to other central banks in anticipation of the highly anticipated next meeting of the FOMC.

Then what?

It is becoming increasingly obvious to crypto investors, as well as those who are more likely to concentrate on hypergrowth stocks, that the movements seen in these more speculative asset classes are increasingly being driven by macro catalysts. This is something that is also becoming increasingly clear to investors who are more inclined to focus on hyper-growth stocks.

When the Federal Reserve raises interest rates aggressively and sends signals that it intends to make money more expensive for a longer period of time, this is not good for assets that are seen as beneficiaries of policies involving low-cost money, which have driven valuation expansion over the course of the past decade.

To put it another way, as interest rates go up, speculators face higher costs associated with borrowing money. And because the crypto ecosystem uses a considerable amount of leverage, an environment that is less favorable for fiat lending is obviously less positive for assets such as cryptocurrencies.

Having said that, if the Federal Reserve follows in the footsteps of the Bank of Canada and raises interest rates by 25 basis points (0.25%) while simultaneously signaling a pause, then perhaps it’s time to throw a celebration. As a result, this week is shaping up to be a crucial turning point for investors, who appear to still have questions over Chairman Jerome Powell’s commentary.

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What’s Next?

If a modest rate hike is followed with signs that a pause (or more preferable cuts) could be in the future, then it’s likely that this asset class will be able to get back in the game again. In point of fact, it would appear that market participants have already factored in a large amount of anticipation in the hope that this week will bring about a favorable development. Therefore, the fall that occurred across the industry today may be an indication that investors are taking some profits off while waiting for the final judgment before getting into the market.

In the world of cryptocurrencies, it is highly likely that this week will be a tumultuous one. It is interesting to observe how crypto investors are pricing uncertainty, and today, it is being reflected in some very strong selling pressure. This selling pressure is a reflection of how investors are pricing uncertainty.

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