Ondo Finance crypto token slumped for three consecutive days as market risks continued rising. The ONDO coin retreated to a low of $1.8018, much lower than the year-to-date high of $2.1431, bringing its market cap to over $2.7 billion.
Hawkish Federal Reserve decision and token unlocks
The Ondo crypto price retreated even after the Federal Reserve delivered its interest rate decision. The bank slashed interest rates by 0.25%, as most analysts expected.
At the same time, officials hinted that the bank will deliver two rate cuts in 2025 as they boosted their inflation estimates. They expect the core inflation to drop to 2% in 2026.
Federal Reserve interest rates have an impact on Ondo Finance because the network was created to tokenize the financial services industry. Its two products are the US Dollar Yield (USDY), which has $450 million in assets and a 4.65% yield, and US Treasuries (OUSG), which has $173 million in assets and a 4.59% yield.
These tokenized assets generally receive their yields from US Treasuries, whose yields rose after the Fed decision. The 10-year Treasury yield rose to 4.5%, while the 30-year rose to 4.69%. These yields mean that Ondo Finance will likely see inflows for longer.
OUSG and USDY are tokenized assets that are better alternatives to traditional stablecoins like Tether and USDC because of their yields. People use them in areas like DeFi, savings, collateral, and payments.
Ondo Finance ultimately hopes to become a bigger player in the growing tokenization industry that will have trillions in assets in the next few years. Analysts estimate that tokenized assets will be over $50 billion in 2025.
Another potential catalyst for the ONDO price is that it will start its token unlocks on January 18, when 2.57 billion tokens will unlock. While unlocks are bearish for a cryptocurrency, historically, most tokens rally towards the unlocking event as hedge funds push it.
Ondo Crypto Price Forecast
The daily chart shows that the ONDO price formed a cup and handle pattern between June and November this year. This pattern has a horizontal line on the top and a rounded bottom.
Ondo Finance has moved above the 50-day moving average and the upper side of the cup. Therefore, by measuring the distance between the upper and lower sides of the cup, we can estimate that the coin will rise to $2.4364, which is about 30% above the current level.
A drop below the support at $1.4820, the upper side of the cup, will invalidate the bullish view and point to more downside.
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