Why Altcoins Like Cardano and Shiba Inu Were Sliding Today

Why Altcoins Like Cardano and Shiba Inu Were Sliding Today

On Wednesday, the cryptocurrency market experienced a significant selloff, with most assets suffering losses. The declines were partly driven by recent macroeconomic news and rising bond yields, which have dampened investor sentiment and shifted many to sell positions.

The broader crypto market saw widespread losses, with major and minor altcoins all reflecting red numbers. Meme token Shiba Inu (SHIB) dropped more than 4%, while Litecoin (LTC) saw a decrease of 3%. Other utility cryptocurrencies like Cardano (ADA) and Solana (SOL) also faced downward pressure, losing nearly 9% and just over 5%, respectively.

Bitcoin’s struggles continued to impact the broader market. After reaching a high of $100,000 last month, Bitcoin has shown signs of instability. While the cryptocurrency had a strong bull run last year, the asset’s relatively higher price now makes it more susceptible to negative news and sentiment shifts. On Wednesday, this sentiment appeared to stem from the latest economic data.

Macroeconomic Impact

On Tuesday, the U.S. Bureau of Labor Statistics released the November job openings report, which showed a rise to 8.1 million openings, up from 7.8 million in October. While this increase typically signals a growing economy and higher consumer spending, the crypto market responded negatively.

Cryptocurrencies, often seen as a hedge against the traditional financial system, can be sensitive to positive economic indicators in ways that might seem counterintuitive. The fear among crypto investors is that a strong economy could lead to higher inflation. If inflation rises, central banks often respond by increasing interest rates. Higher interest rates make assets like bonds more attractive, which can drain funds away from riskier investments like cryptocurrencies.

This concern seems to have played out following the release of the jobs data, with the yield on the 10-year U.S. Treasury note rising significantly. This uptick in bond yields has added downward pressure on cryptocurrencies.

Resilience and Outlook

Despite the market’s short-term struggles, there is reason to believe the cryptocurrency space remains resilient. While the selloff has been notable, there is still strong demand for cryptocurrencies, and the market as a whole appears relatively stable. Unless there is a significant negative development in the coming weeks, it’s unlikely that the market will face an aggressive and sustained sell-off. 

For now, the cryptocurrency market is showing signs of resilience, and the recent downturn may not trigger a long-term downward trend unless additional negative factors come into play. Investors remain hopeful that the market will recover in the near future.