Why Crypto's Altcoins Plunged This Week
Crypto has been hot over the past few months on the back of hope that the Trump administration would ease regulations on the industry and give clarity to developers and entrepreneurs on the Blockchain. That's driven prices higher, but it's also brought in a lot of speculation and FOMO to the crypto market. Some of that reversed this week as all major coins, including altcoins, dropped significantly in value.
According to data provided by S&P Global Market Intelligence, Polkadot (CRYPTO: DOT) has fallen 21.6% over the past week as of 1:30 p.m. ET Friday, Avalanche (CRYPTO: AVAX) is off 23.3%, Internet Computer (CRYPTO: ICP) is down 22%, and Near Protocol (CRYPTO: NEAR) is off 24.2%. Heading into a two-week period when volume will likely be low, this could be just the start to the market' volatility.
The biggest driver of the moves this week was the Federal Reserve, which lowered interest rates by a quarter point on Wednesday. But that was met with skepticism by investors who pushed long-term interest rates higher. Long-term rates drive the valuation of growth stocks and speculative assets like cryptocurrencies and that's why values dropped this week. Ironically, crypto still moves in a correlated manner to growth stocks, rather than being a hedge against the market or inflation.
Source Fool.com
