A Serious Fed Will Put More Pressure on Silly Shiba Inu

Shiba Inu - A Serious Fed Will Put More Pressure on Silly Shiba Inu

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As Shiba Inu (SHIB-USD) hits a seven-month low, you may view this volatility as an opportunity to buy. You may think there’s enough at play to enable it to bottom out and bounce back. So, is it time to buy? Not so fast. Even after a drop of more than 81% from all-time highs, this dog-themed crypto will likely continue to drop in price.

Just as it’s negatively affected the performance of stocks, the Federal Reserve’s latest rate hike has also put pressure on crypto prices. Established names like Bitcoin (BTC-USD) and Ethereum (ETH-USD) have dropped by double-digits in the past week. BTC is down by 14.2% and ETH is down by 13.9%.

SHIB is down by an even larger 19.5%. Before you take this to mean a recovery would likely be outsized, keep in mind the crypto selloff may be far from over. The Fed’s rate hikes will continue to put pressure on digital assets. Bringing down inflation is the U.S. central bank’s top priority. It continues to believe it can do so without causing a recession.

Investors, however, are no longer confident this will be the case. Much like how the Fed spent months calling inflation “transitory” before walking back this thesis, the same thing could play out with its current “soft landing” thesis. It could continue to raise rates even as it brings economic growth to a halt.

Besides impacting the economy, higher rates from a more serious Fed will compel investors to pivot further from speculative assets. That’s especially the case with Shiba Inu.

The pup coin has far less to fall back on compared to established names or altcoins like the “Ethereum killers.” While its fans may believe catalysts like expanded use and token burning will save the day, it’s hard to see that being the case.

It’s too early to tell whether its Shibarium layer-2 solution will help the Shiba ecosystem attract more developers and investors. As for its token burning efforts, while the destruction of SHIB tokens has picked up, it’s still far from enough to make a difference. With 549 trillion in circulation, even destroying tens of billions of them isn’t going to make much of a difference.

In short, it’s silly to assume these “catalysts” will be any match to the downward pressure from a Federal Reserve serious on bringing down inflation, no matter the impact on financial markets. With its drop in price likely to continue in the near future, avoid Shiba Inu at all costs.

On the date of publication, Thomas Niel held long positions in BTC-USD and ETH-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.

Article printed from InvestorPlace Media, https://investorplace.com/2022/05/a-serious-fed-will-put-more-pressure-on-silly-shiba-inu/.

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