The recent sharp decline in meme cryptocurrencies such as Floki and Bonk has raised concerns about the broader cryptocurrency market. This downturn follows a cautious outlook from the Federal Reserve regarding inflation and its pace of interest rate reductions in 2025. The Fed has signaled that inflation will likely remain above its 2% target through 2025, and as a result, the Federal Open Market Committee (FOMC) plans to reduce interest rates only twice next year, as opposed to the anticipated four cuts.
With diminished liquidity in financial markets due to fewer rate cuts, crypto assets have proven to be highly sensitive to such policy changes. As a consequence, significant drops have been observed across the sector. In the last 24 hours, Bonk ($BONK) has fallen by 19.2%, and Floki ($FLOKI) by 23.7%, contributing to a sharp decline in the overall market capitalization of meme coins, which plummeted from $137 billion on December 8 to $87.6 billion this morning—representing a loss of approximately $50 billion in value.
Over the past 30 days, these losses have been even more pronounced, with Bonk down 53.2% and Floki down 38.8%. However, some experts believe both tokens may soon reach key support levels. According to Altcoin Hunter, a crypto analyst on X, Floki may retest the $0.00011 support, where short-term selling pressures could subside. Similarly, Bonk may approach $0.000017 or potentially find support along its trend line.
The recent price drops in meme coins were anticipated, as their rapid growth in recent months appeared unsustainable. Nevertheless, the Fed's unexpected statements seem to have exacerbated the market’s negative reaction. While the cryptocurrency market is still processing the news, the sharp declines in meme coins warrant concern. Despite these short-term setbacks, both Bonk and Floki have seen impressive year-to-date gains, with Bonk up 92.9% and Floki up 336.4%.
