Why Shiba Inu Is Plummeting Today
Key Points
Shiba Inu fell today as investors reacted to news about interest rates.
While the Federal Reserve cut the benchmark interest rate yesterday, investors may not be getting another cut in December.
News about the U.S.'s trade agreement with China may also be weighing on the crypto market today.
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Shiba Inu (CRYPTO: SHIB) has been falling rapidly Thursday. The cryptocurrency's token price had sunk 7.3% over the past 24 hours of trading as of 6:20 p.m. ET. Meanwhile, Bitcoin was down 3.4%, and Ethereum was down 4.5%.
The cryptocurrency market is getting hit with a wave of bearish trading today, and Shiba Inu is participating in the selling momentum. The meme coin is seeing pullbacks in response to news about interest rates, and there may also be another big factor at play.
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Shiba Inu slips on murky outlook for interest rate cuts
The Federal Reserve's Federal Open Market Committee (FOMC) met yesterday and voted to lower the U.S.'s benchmark interest rate by a quarter point. Following recent valuation gains for the crypto market, the cut appears to have already been priced in by many investors. Additionally, some investors were hoping that the Fed would announce a half-point rate cut.
More pressingly, Fed chair Jerome Powell raised doubts over whether the FOMC would serve up another rate cut when it meets again in December. Cryptocurrencies tend to perform better in lower-rate environments, and investors have been hoping that the Fed will keep cutting.
U.S.-China trade news may also be hurting Shiba Inu
President Trump met with Chinese President Xi Jinping in South Korea today, and the two countries reached a trade agreement. While the deal will postpone China's new restrictions on the export of rare-earth minerals, lower tariffs, and secure some wins for the U.S. farming industry, it appears to be more of a short-term deescalation than a full resolution to the disputes between the two countries.
While the U.S. is reducing tariffs on Chinese imports by 10%, many investors were hoping for a larger reduction. If tariffs remain relatively high, it could sustain inflationary pressures and make it more difficult for the Fed to cut interest rates. If so, it could dent bullish momentum for Shiba Inu and other cryptocurrencies.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
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