The Federal Reserve recently announced a 25 basis point rate cut as the market expected, but also downplayed the possibility of further significant easing in 2025, leading to a notable decline in financial market sentiment. This is especially true after the recent strong performances of the U.S. stock market and major cryptocurrencies like Bitcoin (BTC) experienced selling pressure, leading to a cautious market sentiment.
As a result, the cryptocurrency market, especially the meme coin sector, has been hit hard. The price of meme coins, represented by Shiba Inu (SHIB), dropped by about 7% this Wednesday, and the total market capitalization of the meme coin sector plummeted from $117 billion on Tuesday to $106 billion.
Future outlook of the cryptocurrency market
Despite current market pressures, cryptocurrency bulls remain optimistic about future market recovery. Some investors believe that with the Trump administration's inauguration, the U.S. could become the most crypto-friendly government in history, replacing the anti-crypto stance of the Biden administration.
Furthermore, global adoption of cryptocurrencies is accelerating, especially with increasing discussions among countries about Bitcoin as a strategic reserve, which brings potential support to the meme coin sector.
Technical challenges facing Shiba Inu
Despite the poor market sentiment, SHIB may still attract investor attention in the short term. The price chart of Shiba Inu (SHIB) shows some concerning trends. SHIB broke below the 50-day moving average (50DMA) during a recent drop and also fell below the 21-day moving average (21DMA) earlier this month.
Additionally, SHIB's price has breached the lower boundary of the ascending trend channel since mid-November, which may indicate that the price will retreat to the next major support zone around $0.00002160, a drop of 11% from current levels.
However, if SHIB breaks below the summer 2024 lows and breaches the support line of the upward trend, it may face greater downside potential. At that point, SHIB may retest the 200-day moving average (200DMA), with prices potentially dropping to $0.000019 or lower.
Long-term potential of the market: Opportunities for Shiba Inu
Although SHIB faces some downward pressure in the short term, the cryptocurrency market still holds great potential in the long run. The Federal Reserve's tightening policy will not determine the future of cryptocurrencies, especially for meme coins like SHIB, as global adoption of cryptocurrencies is accelerating, and a golden age for the market may be approaching.
Bitcoin may benefit first from this trend, but as the crypto industry matures, altcoins and meme coins (like Shiba Inu) will also be driven by market demand. Shiba Inu has strong community support and a broad web3 ecosystem, which may secure its place in the future cryptocurrency market. Gong. Zong. Hao: Liu Liu says coin.
For investors who can weather short-term turbulence, the current price pullback of SHIB may be an excellent opportunity to accumulate this high-potential asset.
