Ethereum, Shiba Inu, and Dogecoin Are Falling. But Why?
As investors brace themselves for the upcoming inflation data tomorrow and apprehensively weigh potential crypto regulations, cryptocurrency markets plummeted this morning. In particular, Ethereum – currently ranked as the second-largest cryptocurrency – is trading at 3.8% lower since yesterday’s late afternoon; Dogecoin and Shiba Inu are both trading down by 3.3% and 6%, respectively.
CPI Data Expectations Have Rippled the Cryptocurrency Markets
On Valentine’s Day, the United States Bureau of Labor Statistics will disclose its findings from the most recent Consumer Price Index (CPI) survey. This market basket tracks prices for consumer goods and services, giving investors a reliable metric to measure inflation. Although traders still anticipate that Fed rate hikes have reached their conclusion and interest rates may be cut in late 2019, if data does not reflect an easing of rising costs, then higher-than-anticipated interest rates or prolonged periods at current levels could be on the horizon.
Cryptocurrencies, such as Ethereum, were dealt a devastating blow in 2022, as rising interest rates made higher-yield safe assets more attractive and riskier investments such as crypto less desirable.
Additionally, New Investigations and Regulations May Further Affect Ethereum, Shiba Inu, and Dogecoin
Regulatory stresses were felt within cryptocurrency markets this morning as the NYDFS informed Paxos to stop exchanging Binance’s U.S. dollar–linked stablecoin, Binance USD. The department announced that this decision is a consequence of various unaddressed issues involving Paxos and its connection with Binance. This occurrence marks the first time authorities have implemented strict regulations on traditional stablecoins, which are tied one-to-one to either fiat currency or commodities.Hal Press, the founder of digital asset hedge fund North Rock Digital expressed his thoughts on Twitter that these stablecoin regulations may cause a significant structural shift in the space and could significantly influence the cryptocurrency market.
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