The cryptocurrency market, particularly meme tokens like Floki ($FLOKI )and Bonk ($BONK ), has faced a significant downturn following the Federal Reserve’s latest projections on inflation and interest rate policy for the coming year.
Federal Reserve’s Policy Shift Impacts Market Sentiment
The Federal Open Market Committee (FOMC) has revised its outlook, projecting that inflation will remain above the 2% target through 2025. Consequently, the Fed plans to reduce interest rates only twice in 2024, down from the previously expected four cuts. This more cautious stance has reduced liquidity across financial markets, limiting growth prospects.
Cryptocurrencies, especially meme coins, are highly sensitive to macroeconomic news, and the Fed’s dovish position has exacerbated the broader market decline.
Significant Losses for FLOKI and BONK
Over the past 24 hours, meme coins have suffered sharp declines. BONK has dropped 19.2%, while FLOKI has fallen 23.7%. The total market capitalization of meme tokens has plunged from $137 billion on December 8 to approximately $87.6 billion, marking a $50 billion loss.
On a 30-day timeframe, the losses are even steeper, with BONK down 53.2% and FLOKI losing 38.8%.
Key Support Levels in Sight
Despite the severe sell-off, analysts point to potential support levels that could stabilize the decline. According to crypto expert Altcoin Hunter, FLOKI might retest the $0.00011 support level, which could help mitigate selling pressure. Similarly, BONK is nearing its trend line and could find support around the $0.000017 mark, potentially halting further losses in the short term.
An Unsustainable Rally Corrects
The recent surge in meme coin prices was seen as unsustainable, with many anticipating a market correction. However, the Federal Reserve’s unexpected policy outlook has accelerated the downturn. While the market continues to digest these developments, the steep declines in meme coins over the past month amount to what many analysts are calling a market crash.
Year-to-Date Gains Remain Impressive
Despite the recent pullback, meme coins like BONK and FLOKI have delivered strong year-to-date performance. BONK has risen 92.9%, and FLOKI has surged 336.4% in 2024. These figures highlight the overall momentum these tokens have enjoyed throughout the year, even as recent losses weigh on short-term sentiment.
Conclusion
While the Federal Reserve’s revised policy outlook has triggered significant losses across meme coins, long-term performance for tokens like BONK and FLOKI remains robust. With key support levels in sight, investors will closely watch how the market reacts in the coming weeks to determine whether this downturn marks a prolonged correction or a temporary dip.
