According to Mike McGlone, chief commodity strategist at Bloomberg, the speculative rally in memes coins like DOGE and SHIB last year shows “the time has come to eliminate the surplus in crypto space in 2022”.
In one report Announced on Jan. 5, McGlone said an expected rate hike by the US Federal Reserve (Fed) could put pressure on the broader crypto market and cause some of the markets to crash.
“SHIB in the second half of 2021 and DOGE in the first half of 2021 are examples of coins that are speculative hype and fun for gamers on an unprecedented global scale, 24/7,” said McGlone.
He spoke when the Fed announced plans to raise its key rate to 1% by 2022.
The decision was made earlier than expected and has left risky assets like stocks and cryptocurrencies in a tailspin. Bitcoin fell to around $ 41,100 on Friday, 10% less than 48 hours earlier. ETH fell more than 15% to $ 3,200 over the same period.
DOGE and SHIB (both created as satire coins) fell even faster and stronger than the two most valuable cryptocurrencies BTC and ETH. DOGE is down 79% from its all-time high of $ 0.74 in May and is now trading at around $ 0.15.
SHIB is down 67% since it hit a record high of $ 0.00008845 on Oct 28, according to CoinMarketCap data.
SHIB / USDT. Source: TradingView
Blockchain finance firm Everest CEO Bob Reid says the Fed is pushing for “a rate hike that would be bad for cryptocurrencies.”
As rates rise, mainstream conservative investors who have begun accepting digital assets are likely to “return to a more stable and safer investment option.”
McGlone warned that “switching between mainly speculative cryptocurrencies competing with Bitcoin, ETH and USDT is a model that investors should exercise caution”.
He pointed out examples of LTC and XRP. Both have been ousted from the top 5 most valuable cryptocurrencies by “dog coins” like DOGE and SHIB as they rise rapidly in 2021 amid the meme asset euphoria.
Both DOGE and SHIB have since dropped out of the top 10, however, “The endless battle for the top cryptocurrencies, often fueled by hype and speculation, makes us realize that most things that add up quickly are scary . “
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