Why Dogecoin Is Sinking Today

Key Points

• New weekly jobless claims came in at a modest 218,000.

• Meanwhile, gross domestic product got revised higher to 3.8%.

• Strong economic data provides less insight for the Federal Reserve to lower interest rates.

• 10 stocks we like better than Dogecoin ›

Since yesterday afternoon, the price of Dogecoin (CRYPTO: DOGE) has traded roughly 4.5% lower, as of 11:31 a.m. ET today. There is no obvious reason behind the move, but it may have to do with new economic data this morning that is indicative of a strong economy.

Why good news is bad

Weekly jobless claims for the week ending Sept. 20 came in at 218,000 on a seasonally adjusted basis. That's down 14,000 from the prior week and below estimates of 235,000. Jobless claims show people who filed for unemployment benefits for the first time.

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Additionally, the U.S. Commerce Department released the final estimate for second-quarter gross domestic product (GDP), adjusting it higher by a half point to 3.8%, due to higher consumer spending. That's the best quarterly number in over two years.

"The US economy is resilient and the strong GDP is another indication that we are not at risk of any kind of recession, even with slowing labor market growth," Paul Stanley, chief investment officer at Granite Bay Wealth Management, wrote in a recent research note, according to CNN.

While the data is good news for the economy, it also could support a more hawkish route for the Federal Reserve in terms of its trajectory for interest rates, and cryptocurrencies typically perform better in a falling-rate environment.

Crypto is heavily influenced by monetary policy

Investors were surprised at the Fed's recent meeting when the majority of members said they only expect one rate cut in 2026. More data supporting a strong U.S. economy means there is less reason for the Fed to cut rates extensively. This might take some enthusiasm out of the crypto market, which has been banking on a more prolonged interest rate cutting cycle.

As it pertains to Dogecoin, I still have no interest in the token due to its lack of real-world utility.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.