Why the Dogecoin and Shiba Inu Prices Have Crashed Double Digits

Overview of the Market Situation

The Dogecoin and Shiba Inu prices have witnessed double-digit crashes in the last few days, sparking a bearish sentiment for the foremost meme coins. This price decline has occurred due to several factors, including Trump’s tariffs on Mexico and Canada.

Causes of the Price Decline

CoinMarketCap data shows that Dogecoin and Shiba Inu prices have declined over 14% and 12%, respectively, in the last 24 hours. This price decline has been partly due to Donald Trump’s announcement that the proposed 25% tariffs on Canada and Mexico will begin today. This immediately sparked a wave of sell-off among crypto investors amid concerns of a trade war, which is bearish for the crypto market.

This trade war has already begun, as Canada has already imposed retaliatory tariffs on the US, further contributing to the Dogecoin and Shiba Inu price declines. Meanwhile, Trump signed an executive order to raise the tariffs imposed on China to 20%, which has only heightened the uncertainty and bearish sentiment in the market. China has also reacted swiftly by increasing the tariffs on US goods to 15%.

Other Factors Contributing to the Price Decline

Another factor contributing to the Dogecoin and Shiba Inu price crashes is the Trump administration’s decision to pause military aid to Ukraine. This has also sparked market uncertainty as investors weigh how this could impact the war between Russia and Ukraine. This uncertainty has also led to a wave of sell-offs as market participants look to reduce their allocations to these risk assets, which could be greatly impacted.

Amid these developments, the Federal Reserve’s quantitative tightening monetary policies continue to contribute to the declining Dogecoin and Shiba Inu prices. Liquidity flowing into these coins has slowed as the Fed has indicated that it does not plan to cut rates anytime soon, which has impacted the amount of capital investors are willing to allocate to these risk assets. It is worth mentioning that the Atlanta Fed’s revised GDP estimate for Q1 of this year has dropped lower, further amplifying the bearish case for these coins.

Developments in the Crypto Market

Controversy Surrounding the Crypto Strategic Reserve

Certain developments in the crypto market have also led to the Dogecoin and Shiba Inu price declines. One is the controversy surrounding the crypto strategic reserve, with some stakeholders, like Gemini’s co-founder Tyler Winklevoss, arguing that altcoins should not be included in it.

Trump had announced that altcoins like Ethereum, Solana, XRP, Cardano, and other “valuable cryptocurrencies” would be included in the crypto strategic reserve. Trump’s inclusion of other cryptocurrencies besides Bitcoin looks to have watered down the seriousness of the infamous crypto reserve and sparked a bearish sentiment among investors.

Correlation with Bitcoin Price

Meanwhile, Dogecoin and Shiba Inu prices have also crashed due to the Bitcoin price drop, as these assets share a strong positive correlation. The Bitcoin price decline has been partly due to the CME gaps at $85,000 and $78,000, which the flagship crypto needs to fill. BTC traditionally fills these gaps, which means that the crypto, Dogecoin, and Shiba Inu are still at risk of crashing further.

Conclusion

The Dogecoin and Shiba Inu prices have crashed double digits in the last few days, sparking a bearish sentiment for the foremost meme coins. This price decline has occurred due to several factors, including Trump’s tariffs on Mexico and Canada, trade war, and the controversy surrounding the crypto strategic reserve. As the market continues to be bearish, it is essential to remain cautious and monitor the developments.

FAQs

Q: What are the main factors contributing to the Dogecoin and Shiba Inu price decline?

A: The main factors contributing to the price decline are Trump’s tariffs on Mexico and Canada, trade war, and the controversy surrounding the crypto strategic reserve.

Q: How has the trade war affected the Dogecoin and Shiba Inu prices?

A: The trade war has already begun, with Canada imposing retaliatory tariffs on the US, further contributing to the Dogecoin and Shiba Inu price declines. Trump’s decision to raise the tariffs imposed on China to 20% has only heightened the uncertainty and bearish sentiment in the market.

Q: What is the significance of the CME gaps at $85,000 and $78,000 for the Bitcoin price?

A: The CME gaps at $85,000 and $78,000 are significant because they need to be filled. BTC traditionally fills these gaps, which means that the crypto, Dogecoin, and Shiba Inu are still at risk of crashing further.

Q: What is the Federal Reserve’s stance on rates and its impact on the Dogecoin and Shiba Inu prices?

A: The Federal Reserve’s quantitative tightening monetary policies have contributed to the declining Dogecoin and Shiba Inu prices. Liquidity flowing into these coins has slowed as the Fed has indicated that it does not plan to cut rates anytime soon, which has impacted the amount of capital investors are willing to allocate to these risk assets.