Shiba Inu (SHIB) is among the worst-performing coins, trading down 5.5% on Thursday as the overall market fluctuated due to the Fed's latest policy decision. Rising concerns about inflation and the central bank's 25 basis point rate hike dampened investor sentiment, affecting the meme coin as well.

The Fed's interest rate hike was anticipated, but the market was disappointed as the Fed assured that there would be no significant rate cuts in 2025. This more measured approach led to a sell-off in stocks and top digital assets like Bitcoin (BTC), which had already experienced a strong price increase.

Some coins, often characterized by high price volatility, have been impacted the most. This occurred despite meme coins witnessing a drop in their market capitalization, from $117 billion on Tuesday to $106 billion on Wednesday, a decrease of 9.4%, according to CoinMarketCap.

Shiba Inu breaks through important levels

Earlier this month, SHIB fell below the 21-day moving average (21DMA), and the current decline has pushed the price below the 50-day moving average (50DMA). These technical violations are often precursors to price drops.

SHIB has broken below the upward trend line that has guided its recovery since mid-November. These declines raise questions about how much further this meme coin could drop. The next major support level has been identified at $0.00002160, implying a further decline of 11%. This level could fall below the 200DMA, which is around $0.000019 or even lower.

However, the long-term bullish trend from the summer 2024 lows remains intact for SHIB. Nevertheless, the drop below this crucial trend line is likely to lead to another bearish phase.

The decline of Shiba Inu is indicative of the overall trend in the meme market and other speculative coins. Meme coins, which largely depend on community enthusiasm and hype, are more likely to be affected in a bear market. These coins are influenced by the Fed's tight monetary policy stance as risk sentiment declines across all financial markets.

Growth prospects for Shiba Inu

However, cryptocurrency advocates still have high hopes for further development in this industry. The cryptocurrency sector is likely to see changes in the regulatory environment after the Trump administration takes power. Additionally, there is an increasing amount of global discussion regarding Bitcoin's strategic reserves, indicating the ongoing integration of traditional institutions and governments into the cryptocurrency world.

These macroeconomic and geopolitical trends create good opportunities for the resurgence of meme coins. Shiba Inu is one of the key players in this field that could reap significant benefits from the growing attention on memecoins and other low-cap coins.

Traders interested in holding this token for the long term might want to consider the current SHIB price as an entry point. Meme coins have a history of gaining value when they decline, and Shiba Inu has the right characteristics to become the next big trend in this space.

The rest of the cryptocurrency market is still being affected by issues such as macroeconomic instability and legal risks. Stricter regulations worldwide could impact meme coins more than other types of currencies, as most of them are not backed by institutions.

Conclusion

The recent 5.5% drop of Shiba Inu highlights the dangers of speculative assets in the current market environment. However, the strength of the community and the consolidation of the project ecosystem provide reasons for hope. With the market adapting to the Federal Reserve's conservative stance and anticipating a potentially crypto-friendly U.S. government, Shiba Inu could become one of the biggest winners in the future. Those who can withstand short-term losses may see the current decline of SHIB as a good opportunity to invest in a promising coin.

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