Key Takeaways
The cryptocurrency market experienced a notable downturn following the Federal Open Market Committee (FOMC) decision to maintain interest rates within the 5.25%- 5.5% range. Memecoins, particularly, saw an average decline of 10% as investors reacted to the news.
Could this be interpreted as investors first unloading the most risky assets amid uncertainty?
The Federal Reserve’s decision, guided by Chair Jerome Powell, emphasized a cautious and data-driven approach, hinting at a possible rate cut in September contingent upon future inflation metrics. However, with a 50 basis points cut appearing improbable now, market sentiment has been wary, prompting a sell-off in riskier assets like memecoins.
The FOMC’s stance reflects a broader uncertainty in the economic outlook, as it closely monitors upcoming economic indicators to guide its policy decisions.
Powell’s reiteration of the Federal Reserve’s commitment to a nonpolitical and data-dependent approach has left investors speculating about the potential impact on the broader market, including cryptocurrencies.
The 10% decline in memecoins underscores the volatility of the crypto market in response to macroeconomic signals, highlighting the sensitivity of digital assets to changes in traditional financial policies.
As the market awaits further clarity, investors continue to assess the potential implications for the crypto space, particularly in the context of inflation and future rate adjustments.
The upward momentum of BONK, PEPE, FLOKI, and WIF abruptly ended on July 22, marking the conclusion of the recovery phase that began on July 13. As expected, the next stage is likely to be a corrective one.
The prices retraced all the way back to their July 11 highs. BONK and WIF were particularly hard hit, with WIF suffering a significant loss of around 15% as it broke through the support level.
In our previous analysis, we projected a scenario in which WIF could start a major uptrend as its long-lasting WXY correction from March 31 could have ended on the June 24 low. However, the price fell inside the territory of its first rise, which was the point of invalidation, consequently presenting a bearish outlook.
Since the rise from June 24 proved to be a three-wave increase, we can assume it was yet another corrective increase and could be the second wave X from the complex correction count WXYXZ.
That means WIF could continue decreasing past its previous low and look for support around $0.0000084 for the end of its long-lasting correction. Does this indicate meme coins, in general, are going to face the same faith? We are yet to see, but there is still a chance they could find support higher than the July 13 price level.