The cryptocurrency market is evolving and among the meme coins the latest star is Floki Inu, the now popular meme coin. It was in June when Elon Musk had tweeted he intends to name his Shiba Inu Floki that led to a developer inspired to make Floki. The coin was made in August by a developer named Ryoshi.
Today whenever Elon Musk shares something about his Shiba Inu it affects the coin’s market. Like in March 2021 he wrote ‘I am getting a Shiba Inu’, in June, ‘My Shiba Inu will be named Floki’ and in September he wrote ‘Floki has arrived’ the meme coin Floki Inu rose by 1,000 percent in 2 days.
This meme coin which is community owned has since then rapidly grown. It has been inspired by Tesla and SpaceX boss Elon Musk’s Shiba Inu, mentions Floki’s website. Now the Floki Inu trades at $0.00007731 with a trading volume of over $16 million.
When a cryptocurrency is associated with a theme it is called a meme coin. Named after a popular dog, the Dogecoin was the 1st meme coin. Shiba Inu and Floki Inu are other meme coins. These meme coins are all hyper volatile cryptocurrencies. Experts are researching the reasons why the meme coins are seeing a steep rise.
The reasons propagated why the meme coins are so popular is one: they have the presence of a strong community and second the presence of strong personality cults. Like in the case of Floki Inu it is Elon Muskwho has thrown his weight behind the meme coin through his tweets. Another reason could be the low entry level prompts retail investors excited to invest in meme coins thus taking their price higher.
Global Crypto Market Cap Threatens to Break Below Current 2022 Lows
The global cryptocurrency market capitalization topped during the first half of November 2021, and since then it has been on a one-way ride towards the downside. With the entire market currently trading at approximately 35% below all-time highs, many traders are now wondering whether the sellers are already exhausted, meaning that an upward shift is due in the near future, or whether the bear market still has room to go.
In such a challenging environment, trading or investing in crypto is tricky, making it difficult for traders/investors to time the market correctly, and spot key support/resistance areas on the chart. All of the variables that drove valuations higher between 2020-2021 (fiscal/monetary stimulus, weaker fiat currencies, and appetite for riskier assets) have reversed, leaving bulls stumbling for the exit.
Bitcoin weakens below $40k
Speaking of Bitcoin, the $38,000 area is regarded as key support, which might be one of the reasons why the price is still trading around it. The late-March 2022 rally failed to gather pace and now BTC finds itself trading close to the yearly lows.
Things are not looking encouraging, not just because Bitcoin lost 40% from its peak, but also based on the market share. During broad crypto selling, the BTC market dominance increased in past cycles. It doesn’t seem to be the case now, as the figure has stabilized around 42% since mid-2021. Investors want to keep a diversified exposure even during a downturn, and this is a clear signal that Bitcoin’s safe-haven status is weakening.
Major altcoins not showing signs of strength
Anyone who is just beginning to learn how to trade cryptocurrencies should know that this is an environment where caution is advised. Bitcoin aside, things are not looking very good for the altcoins sector as well. Based on the opening price at the beginning of 2022, Ethereum is down 24%, Binance Coin -26% and other tokens such as Solana are posting losses above 50%.
There this might not be the time for buy and hold, considering that valuations might be even more attractive in the future. It is possible, however, to take advantage of what retail brokerages are offering in terms of crypto trading benefits. With derivatives based on cryptocurrencies, short-selling is a viable option, making it possible to take advantage of bearish conditions.
Inflation and broad risk appetite
Rising inflation around the world set a chain of events in motion, and these events are clearly not in favor of crypto bulls. Central banks are forced to step in and normalize monetary policies in developed countries, for price increases to diminish towards their target of around 2%.
Additionally, fiscal spending is taking a few steps back, as governments need to pay higher interest on new debt or refinancing operations. During a time of rising prices, private and institutional investors need to make concessions and prioritize spending.
In such an environment, the interest in volatile assets such as crypto is very low, which explains the lack of momentum. For the time being, global capitalization is trading around $1.72 trillion and threatens to break below the 2022 low of $1.64 trillion. Until the global economy receives a new round of stimulus, there appears to be little hope for a strong bounce back to a bull run.
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