A number of cryptocurrencies fell today for no obvious reason. But bond yields ticked higher, and investors digested several key events from last week that could impact monetary policy, and that might be having an effect.
Over the last 24 hours, the price of the world’s largest cryptocurrency, Bitcoin (BTC -9.88%), traded roughly 2.3% lower as of 2:23 p.m. ET today. The price of the meme tokens Dogecoin (DOGE -20.67%) and Shiba Inu (SHIB -13.59%) traded roughly 4.3% and 4.7% lower, respectively.
Bitcoin and the rest of the crypto market have not fared well this year in the face of rapidly rising interest rates, which have led the market to shun riskier assets and rush to safer ones. Today, bond yields continued to tick higher, which for most of the year has usually coincided with stocks and cryptocurrencies declining.
The market is also still digesting the Federal Reserve’s November meeting last week in which it raised its benchmark overnight lending rate, the federal funds rate, by 75 basis points for the fourth consecutive time.
Leading up to the meeting, many investors had expected to see the Fed pivot from its hawkish policy. Instead, Fed Chairman Jerome Powell said to expect higher interest rates for longer, dampening hopes of an immediate pivot.
Friday’s jobs report didn’t appear to help the cause too much, with U.S. payrolls adding 261,000 jobs in October, way more than economists had expected, although the unemployment rate did tick up from 3.5% to 3.7%. Powell has noted in the past that the Fed will need to see some deterioration in the labor market — which has meaningfully contributed to higher inflation — before it is able to pivot. While there is some debate over whether or not the labor market is actually starting to cool, it by and large still looks strong.
In other news, Dogecoin, which has been rallying since Tesla founder Elon Musk completed his takeover of the social media giant Twitter, has also started to slow down. Musk has been a leader in the Dogecoin community and counts it as one of three cryptos he owns.
Investors seemed to get excited about Twitter’s plans to integrate a crypto wallet into the platform that would be able to support withdrawals and deposits. But now, according to the website Platformer, those plans are on hold.
Many cryptocurrencies, especially altcoins, tend to get a lift when a large and more-mainstream company adopts some kind of crypto component, so it’s understandable that investors are disappointed about this news.
There didn’t appear to be a ton of big developments driving the crypto market down today. It mainly seems linked to investors digesting the Fed’s meeting and other economic data from last week, which is driving bond yields higher.
Investors are still hoping for a Fed pivot soon, which could get more likely if new data later this week can show inflation easing.
Ultimately, I still like Bitcoin at these levels and think the token has great long-term potential. I am not a fan of Dogecoin or Shiba Inu due to their lack of practical uses in the real world and lack of technical advantages over other blockchain networks.