The prices of meme coins like Bonk, Dogwifhat, and FLOKI dropped sharply today, as the overall crypto market cap declined by 5.74%. Bitcoin’s price fell by 4.65%, losing about $6,000 and dropping from a high of $106,470.61 to $100,256.21.
Most cryptocurrencies are struggling today, with only 5 out of the top 100 tokens seeing price increases. The rest are losing value, some by as much as 16%. The tokens that gained value include Pudgy Penguins (PENGU), Bitget Token (BGB), UNUS SED LEO (LEO), Virtuals Protocol (VIRTUAL), and Movement (MOVE).
Why is the crypto market going down today?
The recent drop in the crypto market happened after the US Federal Reserve lowered its policy rate by 0.25% on Wednesday, bringing it to a target range of 4.25% to 4.5%. This change shows a shift in monetary policy amid mixed economic signals.
This was the third rate cut this year, but the Fed also indicated that it plans to reduce rates more slowly next year because inflation remains high.
Typically, rate cuts are good news for riskier assets like cryptocurrencies. However, the market’s reaction reflects fears that slow rate cuts next year due to ongoing inflation could limit liquidity. Investors hoped for quicker economic relief, but this cautious outlook from the Fed creates uncertainty, which can temporarily affect riskier assets like crypto.
The sell-off worsened after Fed Chair Jerome Powell discussed the central bank’s stance on Bitcoin. When asked about the possibility of the Fed holding Bitcoin, Powell said current laws do not allow it.
“We’re not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change,” he said.
The Federal Reserve Act explains which assets the central bank can hold. These include US government securities such as Treasury bills, notes, bonds, and municipal and federal agency securities under specific conditions. Additionally, it can keep reserves in gold and foreign currencies to help manage the value of the US dollar.
Read more: Bitcoin Price Prediction for December 2024
Powell stated that Congress could only decide if the Fed could buy Bitcoin (BTC), and he mentioned that he was not interested in doing so.
“That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”
President-elect Trump has stated that he will stop the US government from selling large amounts of seized BTC on the open market. Instead, he plans to hold Bitcoin as an investment. Although he has yet to officially address the Federal Reserve on this matter, Donald Trump reportedly aims to create a strategic Bitcoin reserve starting in 2025.
What next for Bonk, Dogwifhat, and FLOKI memecoins?
Dogwifhat (WIF) dropped by 16.24% in price over the past 24 hours and now trades at $2.34. Bonk (BONK) fell by 14.25% and currently trades for $0.00003182. FLOKI saw a 12.26% drop and trades for $0.0001945. Many other popular meme coins, such as Pepe (PEPE), Shiba Inu (SHIB), and Dogecoin (DOGE), are also losing value.
Memecoins like BONK, WIF, and FLOKI are very sensitive to market changes and news, and their recovery depends on market stability, a rise in Bitcoin prices, and renewed interest from the memecoin community.
For Bonk, a key level to watch is the support near $0.000030. If it drops below this level for a long time, it may lead to more panic selling. Dogwifhat (WIF) has strong community support and needs to bounce back to $3.00 to build confidence and return to its upward trend. The FLOKI memecoin must also maintain support near $0.00018 to prevent further losses.
In the short term, the performance of these meme coins will likely reflect Bitcoin’s performance. If BTC returns and stabilizes above $105,000, it could spark renewed interest in riskier assets, including memecoins, and lead to a potential recovery.
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