Here’s Why The Dogecoin And Shiba Inu Prices Crashed Violently

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As an analyst with over two decades of experience in the financial markets, I have witnessed numerous market fluctuations and learned to navigate through them with a keen eye for detail and a steady hand. The recent crash in Dogecoin and Shiba Inu prices is no exception, and it’s clear that the Fed Chair Jerome Powell’s speech has played a significant role in this decline.

Over the past day, I’ve observed a steep drop in the prices of Dogecoin and Shiba Inu. This downturn seems to be partly influenced by Jerome Powell’s speech, which portrayed a rather gloomy outlook for cryptocurrencies, despite his announcement of a 0.25% reduction in interest rates (25 basis points).

Why The Dogecoin And Shiba Inu Prices Crashed

In the past day, both Dogecoin and Shiba Inu’s prices have dropped by more than 5%. This decline occurred even after the Federal Reserve announced a 0.25% interest rate reduction. Many experts attribute this price drop to a pessimistic outlook on cryptocurrencies given by Fed Chair Jerome Powell in his recent speech, which may have had a negative impact on these digital assets.

Powell hinted in his speech that the Fed was currently ‘hawkish’ despite the 25 bps rate cut. He also suggested that there would likely be fewer rate cuts in 2025, having already made three rate cuts this year. The Fed being hawkish is bearish for the Dogecoin and Shiba Inu prices as investors become more skeptical about investing in these risk assets. 

For Dogecoin, crypto analyst Kevin Capital pointed out that its technical signals were currently pointing towards a downtrend. Yet, he suggested this outlook might change if the Federal Reserve adopted a more accommodating stance. Unfortunately, this didn’t occur, implying that the price of Dogecoin could potentially drop even more, as both its fundamental and technical aspects are currently bearish.

Powell’s views on the Strategic Bitcoin Reserve may have played a role in the declines of Dogecoin and Shiba Inu prices. The Chair of the Federal Reserve stated that the US Central Bank cannot hold Bitcoin, and there are currently no plans to change that law. This declaration led to a drop in Bitcoin’s price below $100,000.

Given their strong relationship with Bitcoin, it’s reasonable to anticipate that the costs of Dogecoin and Shiba Inu might mirror its trends. If Bitcoin keeps falling, there’s a possibility that the prices of Dogecoin and Shiba Inu could also experience additional decreases.

What Next For DOGE?

In a recent X post, Kevin Capital mentioned that the bias is to the downside in the short term for the Dogecoin Price. This came as he revealed that Dogecoin has witnessed seven straight candles in a row and failed to get above the Macro .786 Fib. The analyst added that DOGE is also losing the macro .5 Fib on the linear chart. 

Additionally, Kevin mentioned Bitcoin in relation to the potential influence it might have on Dogecoin and Shiba Inu costs. He explained that Bitcoin is currently being turned away at the significant 1.703 level and producing a bearish daily chart while holding a substantial amount of long liquidity towards decreases.

Despite some recent turbulence, the analyst remains optimistic that these digital coins will recover their upward trend. He argued that the reaction to Powell’s speech has been excessive, and that the current decline will be countered by buying activity. Furthermore, he suggested that this market fluctuation is a typical correction in line with market dynamics.

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2024-12-19 17:11