Wednesday was not particularly good for cryptocurrency trading, as many altcoins lost huge percentages. Also down were Shiba Inu (SHIB), Litecoin (LTC), Cardano (ADA), and Solana (SOL), as a larger market downturn. Macroeconomic news, bond yields rising, and possibilities of higher interest rates were responded to by investors, dampening the market sentiment.
Shiba Inu and Litecoin Fall Amid Inflation Fears
The release of the Bureau of Labor Statistics’ job openings report stirred concern among cryptocurrency investors. An increase from October’s 7.8 million to 8.1 million marked November’s job openings figure. While an increase such as this implies a growing economy, it does indicate a strong possibility that inflationary pressures will increase. Subsequently, central banks will have to raise interest rates.
Cryptos like Bitcoin, Cardano, and Shiba Inu are sensitive to inflation concerns. High interest rates can work against investments like bonds, which pay much less in interest when interest rates are high. This shift can take money away from riskier investments such as cryptocurrencies, causing market sell-offs.
This means that altcoins like Shiba Inu and Litecoin have lost their value. Later in the afternoon trading, Shiba Inu dropped over 4%. Litecoin trailed closely behind, falling by 3%, on fears about the economic outlook.
Cardano and Solana Fall Amid Bond Yield Surge
Also, the rise in bond yields has been critical, particularly the 10-year U.S. Treasury note yield. Since bond yields are growing, cryptocurrencies look less attractive to investors looking for safer returns. Meanwhile, the big shift in investment strategy towards government bonds only escalates the fall in the altcoin market.
However, these changes had a more noticeable effect on altcoins like Cardano and Solana. Solana slipped by more than 5%, while Cardano witnessed a drop of nearly 9% in the past 24 hours. Furthermore, both cryptocurrencies are highly volatile and sensitive to macroeconomic occurrences, further aggravating the downward pressure.
Along with most other cryptocurrencies, Bitcoin has also been through a tumultuous time. This week, Bitcoin struggled to maintain its upward momentum, which saw its price surge over the $100,000 mark last month. The wider volatility in Bitcoin also impacts other, more obscure coins, such as Cardano, Shiba Inu, and Litecoin.
Altcoins Hold Ground Despite Macro-Economic Difficulties
Despite the sell-off, it doesn’t appear to have prompted a significant crash in cryptocurrency markets. There is still a strong demand for altcoin investors who are waiting for better market conditions. Resilience across crypto markets implies we are unlikely to see a prolonged downtrend absent a large shock to the broader economy.
However, the crypto market has weathered such conditions, even if the current economic environment is difficult. Most analysts think that cryptocurrencies will return unless more dramatic negative events occur. Meanwhile, market participants will hold their breath for further cues about potential disruption to inflationary trends and central bank policies.
Therefore, the downturn in altcoins such as Cardano, Shiba Inu, and Litecoin is due to the macroeconomic landscape. Riskier assets, such as those shown in cryptocurrencies, have also received pressure from job growth and rising bond yields. The circumstances are tough, but the general state for altcoins is stable, with investors waiting for fresher economic signals.
FAQs
Why are altcoins like Cardano and Shiba Inu dropping?
Altcoins are dropping due to rising bond yields and inflation concerns.
How do rising bond yields affect cryptocurrencies?
Rising bond yields make safer investments like bonds more attractive, reducing demand for cryptocurrencies.
Will the cryptocurrency market recover from the downturn?
Analysts believe the market will recover unless significant negative events occur.
Why are cryptocurrencies sensitive to inflation and interest rates?
Higher interest rates shift investor focus to traditional assets, reducing crypto investment appeal.
