Category: Crypto News
Why Bitcoin, Ethereum, and Bonk Plunged Today
As of 1:45 p.m. ET, the value of Bitcoin (BTC -2.00%) has dropped 2.8%, Ethereum (ETH -4.40%) is down 5.2%, and Bonk (BONK -8.50%) has fallen 9.4%. The move was impacted by a long holiday weekend in parts of the world, but 24/7 trading in crypto kept market speculation moving.
Image source: Getty Images.
Inflation strikes again
The biggest data point impacting the market today is the ISM factory index, which improved by 2.5% in March to 50.3%. A reading over 50% indicates that manufacturing managers think the manufacturing market is expanding. This followed 16 straight months of expected declines.
Investors take this reading as a sign the economy is doing fine, despite higher interest rates over the past few years. If inflation is under control and the Federal Reserve doesn’t need to cut rates to help the economy, it may not cut rates at all.
Bond traders are now pricing odds at a rate cut in June 2024 at less than 50%, which would have been a shock coming into the year. Investors were expecting as much as six rate cuts and they may get through two quarters with none.
Crypto’s decline today
There’s a correlation between technology and high-growth stocks and cryptocurrencies and part of the move higher over the past six months has been an anticipation of lower interest rates. As that thesis falls apart it’s not unusual to see cryptocurrencies drop.
Bitcoin exchange-traded funds (ETFs) were another catalyst and that brought billions of dollars into the industry. But last week they started to see outflows, although those turned into inflows again late in the week.
Ethereum has also gotten a boost from speculation that it will get ETFs approved over the next few months. But that’s not certain in the current regulatory environment.
If ETFs aren’t a catalyst because more aren’t approved, crypto values may slide.
Bonk’s move is just a mirror of the others with some extra volatility added in. This is a meme coin that’s become a popular alternative to Dogecoin, but its main value is speculation rather than being a blockchain currency like Bitcoin or Ethereum.
Where does crypto go from here?
I think the major catalysts of 2024 are already behind us. Bitcoin’s ETFs have helped increase awareness and investment in crypto and that pulled the entire industry higher. And speculation based on the economic environment and a potential cut in rates seems to have been overdone.
That leaves fundamentals driving the crypto market and that’s not a great place to be. Bitcoin may have value as a “digital gold,” but I think it’s more of a speculative asset than anything. Ethereum’s promise was always that it would provide real-world use cases in finance and digital assets, but it’s so slow and so much more expensive that other blockchains are gaining popularity.
Bonk’s meme pop has been nice, but the meme coins never seem to last. And without a catalyst, I could see all three cryptos falling over the next few months as investors look for more fundamental value on the market.
Written by : Editorial team of BIPNs
Main team of content of bipns.com. Any type of content should be approved by us.
Share this article: