Why Altcoins Had a Rough Week

Source The Motley Fool

Cryptocurrencies had a tough week as the conflict in the Middle East intensified and traders began to doubt the number of interest rates baked into the forward curve. The price of Bitcoin, viewed as a bellwether for the industry, had fallen 8.6% as of mid-day Thursday.

The price of meme token Shiba Inu (CRYPTO: SHIB) crashed nearly 24%. Meanwhile, the price of XRP (CRYPTO: XRP) fell nearly 13%, and Solana (CRYPTO: SOL) was down close to 16%.

Geopolitical and macro issues

Crypto tokens responded poorly to escalating tensions in the Middle East this week, with Iran launching 200 ballistic missiles into Israel in response to the country's limited ground invasion of Lebanon against the militant-backed group Hezbollah. Israel vowed to respond to Iran's attack. As of late morning Thursday, Israel had launched air strikes in Southern Beirut, targeting Hezbollah's intelligence headquarters.

What does all this have to do with crypto? Well, Iran has one of the largest oil reserves in the world, so further conflict in the region or a hit to Iran's oil production or associated oil equipment could impact the global oil market. Oil prices have been rising all week, and WTI crude oil, a benchmark for U.S. oil prices, had risen nearly 4.3% at around 11:30 a.m.

Higher oil prices have pushed the U.S. dollar index up nearly 1.5% over the last five days, approaching $73 per barrel. Some traders are betting on oil prices reaching $100 per barrel or even higher. Cryptocurrencies are viewed as an alternative to mainstream currencies and have historically performed better with a weaker dollar.

In other news, traders are paring their views of how much the Federal Reserve will cut interest rates. Earlier this week, the majority of traders were betting on an additional 75 basis points of rate cuts this year and for the federal funds rate to potentially fall below 3% by the end of 2025.

Today, while still in the minority, more and more traders see the Fed making only 50 basis points of cuts in its final two meetings of the year. A slight majority now expect rates to end 2025 above 3%. Higher interest rates typically result in a higher dollar.

In token-specific news today, the Securities and Exchange Commission (SEC) is appealing a court decision that said XRP was not a security when Ripple, the creator of the token and network, sold XRP in 2012. The SEC had sued Ripple and the company's former founders for selling unregistered securities.

Many stakeholders watched the case closely because if XRP had been deemed a security, many other cryptocurrencies would have been as well. Securities are regulated by the SEC, which many believe would subject crypto to a much tougher regulatory regime, so stakeholders are hoping the SEC's appeal will be unsuccessful. On a more positive note for XRP, the crypto asset manager Bitwise reportedly took the first step yesterday in a process that could lead to the launch of an exchange-traded fund tracking XRP.

The outlook moving forward

Crypto investors will want to monitor developments in the Middle East and how they may impact oil prices, as well as the forward curve, both of which could impact crypto prices.

XRP and Solana present interesting technology and use cases, and I think it's OK if investors want to dip their toes in the water. However, I would not advise taking a significant position right now due to the volatility that altcoins could experience. Rather, I think the best crypto play is to simply buy the dip on Bitcoin, which I see a much clearer long-term path for.

Should you invest $1,000 in XRP right now?

Before you buy stock in XRP, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and XRP wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $728,325!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 30, 2024

Bram Berkowitz has a position in Bitcoin. The Motley Fool has positions in and recommends Bitcoin, Solana, and XRP. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
US October PPI Preview: Fed Rate Hike Expectations Rise, PPI May Be Key Variable; How Will US Stocks, Dollar, and Gold Move?On Friday (Nov. 13) Eastern Time, the U.S. will release the October Producer Price Index (PPI). Following the October CPI once again exceeding expectations, the market will look to the PP
Author  TradingKey
9 hours ago
On Friday (Nov. 13) Eastern Time, the U.S. will release the October Producer Price Index (PPI). Following the October CPI once again exceeding expectations, the market will look to the PP
placeholder
Gold closed below $4,000 again — the ETF crowd and central banks stayed, the momentum money leftSpot gold is trading near $3,999, its third consecutive lower daily low, after a 5.00% 10-year yield and a 102.85 dollar index raised the odds of a December hike to 87%. But the selling is not coming from the strategic holders: managed-money net longs fell to 324 tonnes, a 21-week low, and Goldman Sachs attributes roughly 95% of five weeks of selling to non-reportable positions. ETFs still hold a record 4,256 tonnes and central banks bought 321 tonnes in Q3. The table below sets the triggers, directions and levels.
Author  Irene Q.
15 hours ago
Spot gold is trading near $3,999, its third consecutive lower daily low, after a 5.00% 10-year yield and a 102.85 dollar index raised the odds of a December hike to 87%. But the selling is not coming from the strategic holders: managed-money net longs fell to 324 tonnes, a 21-week low, and Goldman Sachs attributes roughly 95% of five weeks of selling to non-reportable positions. ETFs still hold a record 4,256 tonnes and central banks bought 321 tonnes in Q3. The table below sets the triggers, directions and levels.
placeholder
Nvidia slid 7.7% after hours while AMD and Broadcom rose — the AI trade changed hands, it didn't breakNvidia closed Wednesday at 173.73, up 2.87%, then fell as much as 8.1% to 159.44 after reports that its board was preparing for a possible leadership change. The same session, the Philadelphia Semiconductor Index rose 5.7% with all 30 components higher, CoreWeave jumped 24.7% on 168% revenue growth, and Micron added 11.9%. If AI demand were being repriced, AMD and Broadcom would not be bid. This is a governance discount on one name, and 204.54 — the 200-day average — is the level that settles it.
Author  Irene Q.
15 hours ago
Nvidia closed Wednesday at 173.73, up 2.87%, then fell as much as 8.1% to 159.44 after reports that its board was preparing for a possible leadership change. The same session, the Philadelphia Semiconductor Index rose 5.7% with all 30 components higher, CoreWeave jumped 24.7% on 168% revenue growth, and Micron added 11.9%. If AI demand were being repriced, AMD and Broadcom would not be bid. This is a governance discount on one name, and 204.54 — the 200-day average — is the level that settles it.
placeholder
Gold Extends Slide Below $4,000 as Rising US Inflation, Fed December Hike Bets Pressure Prices On November 12, gold prices (XAUUSD) extended their recent losses, falling further below $4,000 in early Asian trading to hit an intraday low near $3,968, marking a third consecutive day
Author  TradingKey
16 hours ago
On November 12, gold prices (XAUUSD) extended their recent losses, falling further below $4,000 in early Asian trading to hit an intraday low near $3,968, marking a third consecutive day
placeholder
Bitcoin lost its 200-day average — but the exit started three sessions before the CPIBitcoin fell 2.5% to about $73,400 on 11 November, an 11-week low, breaking its 200-day moving average near $73,100. The 24-hour liquidation tally reached $632 to $705 million, roughly 82% of it longs. But spot ETF outflows began three sessions earlier and USDT's market cap has shrunk $6.6 billion in 60 days — the leveraged length left before the inflation print did. A double top at 81,890 and 81,080 leaves a measured target of 69,366.
Author  Suzie
Yesterday 03: 22
Bitcoin fell 2.5% to about $73,400 on 11 November, an 11-week low, breaking its 200-day moving average near $73,100. The 24-hour liquidation tally reached $632 to $705 million, roughly 82% of it longs. But spot ETF outflows began three sessions earlier and USDT's market cap has shrunk $6.6 billion in 60 days — the leveraged length left before the inflation print did. A double top at 81,890 and 81,080 leaves a measured target of 69,366.
goTop
quote