Shiba Inu, Bonk, Pepe prices rebound: Beware of dead cat bounce

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As a seasoned crypto investor with a knack for spotting trends and reading market signals, I find myself both intrigued and cautious as I observe the recent rebound of meme coins like Shiba Inu, Bonk, and Pepe. The economic data released by the US certainly seems to have given a boost to these digital tokens, which is a positive sign. However, my life experience has taught me that market rallies can sometimes be deceiving, and it’s crucial to stay vigilant.

On December 21st (Saturday), many meme coin prices bounced back, recovering from a downward trend that had lasted all week long. As a result, their total market value increased by approximately 4.7%, reaching an aggregate worth of about $109 billion.

The price of Shiba Inu (SHIB) climbed approximately 12.6%, peaking at $0.00002397 during the trading day. Bonk (BONK), the leading meme coin in the Solana universe, jumped by 20% to reach $0.000032. Pepe (PEPE) and other well-liked meme coins such as Dogewhats and Pudgy Penguins surged more than 15%.

Following the fall of Bitcoin (BTC) from approximately $108,200 to $97,000, a substantial decline occurred in many altcoins, causing the overall market value of all cryptocurrencies to plummet from over $3.7 trillion to around $3.37 trillion.

It appears that the recent bounce-back can be attributed to the positive news from the U.S.’s strong Personal Consumption Expenditure report. The main PCE, which is closely watched by the Federal Reserve as an indicator of inflation, showed a slight decrease from 0.2% in October to 0.1% in November. The core PCE also declined, going from 0.3% to 0.1%, suggesting that inflation rates in both urban and rural areas may be decelerating.

On Friday, American stocks displayed a favorable response to the release of the PCE report, as indicated by gains exceeding 1.18% for the Dow Jones, 1.10% for the S&P 500, and 0.85% for the Nasdaq 100.

A few days following a Fed decision perceived as hawkish, leading to a drop in risky investments such as stocks and cryptocurrencies, the bank reduced interest rates by 0.25%. This now brings the annual reductions to one percent, with the bank suggesting an additional two cuts may occur in 2024. The latest meeting’s dot plot suggested a possible four cuts.

The Federal Reserve maintained its aggressive stance, citing persistent high inflation as the reason. Notably, the latest figures revealed a 2.7% increase in the overall Consumer Price Index, with the core rate holding steady at 3.3%. Moreover, the bank anticipates that some of President-elect Donald Trump’s economic measures, particularly tariffs, could contribute to inflationary pressures.

Shiba Inu, Bonk, and Pepe rise could be a dead cat bounce

meme-based cryptocurrencies such as Shiba Inu, Pepe, and Bonk possibly surged due to increased buying by crypto enthusiasts who took advantage of a price drop that had persisted for three straight days.

A potential risk for the ongoing rebound is that this could be a dead cat bounce. A DCB is a situation where falling asset prices stage a brief rebound and then resume the downward trend.

For example, Shiba Inu dropped by 15% on Dec. 9 and by 1% on the following day. It then formed a DCB by rising by 6% on Dec. 11 and then resumed its downtrend, reaching a low of $0.00001855 on Dec. 20.

An additional concern with these digital coins, particularly Shiba Inu, is the possibility they’ve developed a “head and shoulders” chart formation, which could signal a potential price decline.

A Head and Shoulders (H&S) pattern refers to a commonly used bearish indicator composed of three parts: a head, two shoulders, and a horizontal line known as the neckline, currently situated at $0.00002280. This configuration could indicate that the digital asset is likely to extend its bearish trend.

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2024-12-21 19:42