This week isn't going well for crypto, as some of the top altcoins lost value Tuesday. A top Federal Reserve issue depressed sentiment, which was already falling after the bitcoin rally.
Tuesday's losses were mostly minor. Late afternoon trade saw Dogecoin (CRYPTO: DOGE) drop more than 3%, while Chainlink (LINK) and Bitcoin Cash (BCH) fell 2% and 4%, respectively. Aptos (CRYPTO: APT) fell 0.1%.
The Fed speaks, and crypto listens. Fed Chair Jerome Powell and Vice Chair Philip Jefferson are the villains. Both indicated Wednesday that the central bank was less likely to lower its benchmark interest rate.
Powell told an audience in Washington, D.C., that "The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence." Jefferson advised the Fed to keep its powder dry if inflation persists. Another time, he added, "The job of sustainably restoring 2% inflation is not yet done."
The Fed and other government officials are viewing interest rates in this manner after the Bureau of Labor Statistics reported 3.5% inflation in March. Unfortunately for rate hawks, that was above the average economist projection and up from February.
Though not depressing, prospects were stronger a few months ago. After good inflation data, Fed officials said they would decrease rates three times this year.
Bad inflation The Fed's key interest rates are important to crypto investors but not everything. Government bonds, the safest investment, rise with rates.
When safety plays are appealing, the market sells risky assets. Tech stocks used to fit this, but now cryptos do. Less usefulness means more downside potential for a cryptocurrency. Attention Dogecoin and meme coin investors! Many crypto bulls will watch inflation. After all, fighting it may take longer and be harder than imagined.
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