Crypto Downturn Intensifies as Loose US Monetary Hopes Fizzle

Meme-favored cryptocurrencies such as Pepe, dogwifhat, and Bonk have plummeted in the past 24 hours, dragging down a gauge of smaller digital assets to its largest one-day drop in more than two weeks. The retreat adds to signs that the recent crypto rally, including Bitcoin hitting a record high, has lost momentum as April begins.

Crypto Downturn Intensifies Amidst Waning Hopes for Loose US Monetary Policy

As the path towards a more accommodative monetary policy in the United States becomes increasingly elusive, the speculative fervor that has buoyed the cryptocurrency market is showing signs of faltering.

Meme Coins and Smaller Digital Assets Plunge

Coins that have been popular with the meme-trading crowd, such as Pepe, dogwifhat, and Bonk, have all suffered significant declines over the past 24 hours. This sell-off has contributed to a broader downturn in the gauge of smaller digital assets, which experienced its steepest daily drop in over two weeks on Monday.

Bitcoin Momentum Wanes

The retreat in smaller crypto assets comes as Bitcoin, the largest cryptocurrency by market capitalization, has also lost some of its upward momentum. Bitcoin's price has fallen by approximately 6% since hitting a record high of $73,798 in mid-March.

Factors Contributing to the Downturn

Several factors are contributing to the current crypto sell-off. One key factor is the cooling of inflows into US spot-Bitcoin exchange-traded funds (ETFs). These ETFs had been a major source of demand for Bitcoin earlier this year, but the pace of inflows has slowed in recent weeks.

Additionally, a more cautious mood has pervaded global markets amid lingering inflationary pressures in the United States. This has led investors to curb their expectations of a significant loosening of monetary policy by the Federal Reserve, a development that had previously been seen as positive for speculative markets like cryptocurrencies.

Upcoming Bitcoin Halving Event

Despite the current downturn, some analysts remain optimistic about Bitcoin's long-term prospects. The cryptocurrency's supply of new tokens is set to halve this month, a quadrennial event that some traders view as a potential catalyst for price appreciation.

However, the broader market conditions and the trajectory of US monetary policy remain key factors that will shape the future direction of the cryptocurrency market. Investors are advised to proceed with caution and carefully consider the risks associated with investing in this highly volatile asset class.

Additional Market Insights

• An index of the top 100 digital tokens rose by 61% during the first three months of the year, marking the largest gain since the same period in 2021.
• Investors are now anticipating fewer interest rate cuts by the Fed, which has led to higher Treasury yields and a stronger US dollar, creating a headwind for speculative markets like cryptocurrencies.
• Bitcoin was trading at $69,420 as of 9:58 AM Tuesday in Singapore, extending a decline of about 1.5% from the previous trading session in the United States.
• The cryptocurrency market is highly dynamic and prices can fluctuate rapidly, making it crucial for investors to have access to reliable information and analysis.