The cryptocurrency market, particularly meme tokens such as Floki ($FLOKI ) and Bonk ($BONK ), is facing a sharp downturn following the Federal Reserve's recent projections regarding inflation and interest rate adjustments for the upcoming year.
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Federal Reserve's Dovish Stance Triggers Market Reaction
The Federal Open Market Committee (FOMC) has adjusted its forecast for interest rates, indicating that while inflation is expected to remain above the 2% target into 2025, the central bank will reduce rates by only two times in 2024, rather than the four cuts that had previously been anticipated. This policy shift has resulted in decreased liquidity across financial markets, with fewer rate cuts expected to stimulate growth.
Cryptocurrency assets, especially meme coins, are highly sensitive to such news, and this change in the Fed’s stance has intensified the ongoing market decline.
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Sharp Losses for BONK and FLOKI
Over the past 24 hours, meme coins BONK and FLOKI have experienced substantial losses. BONK has fallen by 19.2%, while FLOKI has dropped 23.7%. The total market capitalization of meme coins has plummeted from $137 billion on December 8 to approximately $87.6 billion today, reflecting a loss of roughly $50 billion.
In the last 30 days, the declines have been even more significant, with BONK losing 53.2% and FLOKI down 38.8%.
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Potential for Support at Key Price Levels
Despite the steep declines, some analysts suggest that both FLOKI and BONK may be nearing crucial horizontal support levels. Crypto expert Altcoin Hunter predicts that FLOKI could soon retest the $0.00011 mark, a critical support level. Similarly, BONK may look to test its trend line or find support at the $0.000017 level, where short-term selling pressures could subside.
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Unlikely Surge Leads to Market Correction
The recent sharp rise in meme coin prices was considered unsustainable, and a correction had seemed inevitable. However, the Federal Reserve's unexpected policy stance has amplified the ongoing pullback. While the market is still absorbing the impact of these developments, the declines in meme coins over the past month are substantial enough to be considered a market crash.
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Year-to-Date Performance Remains Positive for Meme Coins
Despite the recent downturn, it is important to note that both BONK and FLOKI have delivered strong performance in 2024. BONK has risen by 92.9% year-to-date, and FLOKI has seen an impressive increase of 336.4%. This positive performance for the year indicates that, despite recent losses, these tokens have had strong momentum overall in 2024.
