Dogecoin dipped sharply on Monday as the U.S. Federal Reserve opted to keep interest rates elevated, dashing hopes for an imminent rate cut. The meme-inspired cryptocurrency plunged more than ten percent, touching lows near $0.16. This sell-off weighed on broader crypto markets, sending Bitcoin down around 2% and Ethereum slipping 3% in early trading.
Market Reaction and Technical Indicators
Traders noted that Dogecoin’s recent break below the $0.18 support level triggered stop-loss orders, accelerating the slide. On-chain data show that a flurry of large DOGE holders moved coins to exchanges, suggesting profit-taking in the wake of last week’s rally. Technical indicators display oversold readings on the relative strength index (RSI), hinting at a potential short-term rebound, though bearish momentum remains strong.
Impact of Fed Policy on Cryptocurrencies
The Federal Reserve’s decision to hold policy rates steady underscores its commitment to tame inflation, even at the expense of growth. Risk assets like crypto have reacted negatively, as higher borrowing costs and a stronger U.S. dollar make investors more cautious. The benchmark 10-year Treasury yield climbed back toward 4.5%, further tightening financial conditions and dampening appetite for speculative coins.
Looking Ahead
Market participants will now turn their attention to upcoming U.S. inflation data and the Fed’s meeting minutes for cues on the central bank’s next moves. If inflation moderates and growth slows, traders may price in rate cuts for 2024, potentially sparking a recovery in Dogecoin and the wider crypto complex. Until then, volatility is likely to remain elevated, and meme coins may struggle to sustain rallies without fresh catalysts.