Will the Crypto Market Collapse if Floki and Bonk Continue to Fall?
Meme coins like Floki and Bonk are experiencing a sharp decline, driven by the Federal Reserveās bleak outlook on inflation and its slower-than-expected approach to reducing interest rates next year.
The Federal Open Market Committee (FOMC) announced that inflation is likely to remain above their 2% target through 2025. Consequently, the Fed plans to cut rates only twice in 2025, instead of the previously anticipated four times, as per statements from the central bank chairman.
With fewer rate reductions, financial markets face reduced liquidity. Crypto assets, which are particularly sensitive to such economic shifts, are now feeling the impact of the Fedās unexpected monetary policy update. This has triggered a massive sell-off across the market.
In the last 24 hours, BONK has plunged 19.2%, and FLOKI has dropped by 23.7%. The combined market capitalization of meme coins, as tracked by CoinMarketCap, fell from $137 billion on December 8 to $87.6 billion this morningāa staggering $50 billion wiped out in a matter of days.
A 30-Day Freefall for BONK and FLOKI
The situation looks even grimmer when examining the past month. BONK has nosedived 53.2%, while FLOKI has lost 38.8% of its value over the same period.
FLOKI and BONK Approaching Key Support Levels
According to crypto analyst Altcoin Hunter, FLOKI is likely to retest a critical horizontal support level at $0.00011, which could temporarily halt the sell-off. Similarly, BONK may revisit $0.000017 or rebound off its chartās trendline.
The rapid ascent of meme coins like BONK and FLOKI earlier this year was widely considered unsustainable. The Federal Reserveās unexpected policy shift has only exacerbated their decline, catching many market participants off guard.
While the market is still digesting the news, the situation is severe enough to label this a ācrash.ā With losses exceeding 30% for many meme coins over the past month, investors have reasons to be concerned.
A Mixed Year for Meme Coins
Despite the recent slump, both BONK and FLOKI have performed exceptionally well year-to-date. BONK has gained 92.9% since January, while FLOKI boasts an impressive 336.4% rise over the same period.
The crypto market is now at a critical juncture. Whether these meme coins can stabilize or continue their downward spiral remains to be seen.
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