Dogecoin and Shiba Inu, two popular meme coins, recently experienced a significant price drop. Let’s explore the reasons behind this downturn.
Trade Wars and Economic Uncertainty
A major factor contributing to the crash was Donald Trump’s announcement of increased tariffs on Canada and Mexico. This sparked fears of a wider trade war, leading to a sell-off in the crypto market. Canada’s retaliatory tariffs and further tariff increases between the US and China only exacerbated the situation, creating significant market uncertainty. Adding to this, the Trump administration’s decision to pause military aid to Ukraine further fueled investor anxiety. All this uncertainty pushed investors to offload riskier assets like Dogecoin and Shiba Inu.
The Fed’s Role and Economic Slowdown
The Federal Reserve’s ongoing quantitative tightening (reducing the money supply) also played a role. With no rate cuts anticipated, less money is flowing into riskier investments like meme coins. A downward revision of the first-quarter GDP estimate further dampened investor sentiment.
Crypto Market Specifics
Several developments within the crypto market itself contributed to the decline. Controversy surrounding a proposed “crypto strategic reserve” – specifically, the inclusion of altcoins like Ethereum, Solana, and others alongside Bitcoin – created confusion and negativity. Some investors viewed this inclusion as diluting the reserve’s importance.
Finally, the price drop in Bitcoin, to which Dogecoin and Shiba Inu are strongly correlated, also dragged down their values. Unfilled gaps in Bitcoin’s price chart suggest further potential declines for Bitcoin, and consequently, for Dogecoin and Shiba Inu.
