On Saturday, Dec. 21, most meme coin prices rebounded after declining for much of the week. Their combined market cap increased by 4.7% to reach $109 billion. Shiba Inu’s price surged by 12.6% to an intraday high of $0.00002397. Bonk, the leading meme coin in the Solana ecosystem, rose by 20% to $0.000032. Pepe and other popular ones like Dogwifhat and Pudgy Penguins climbed by over 15%.
This rebound followed a Bitcoin plunge from $108,200 to $97,000 that led to a significant crash among most altcoins. The total cryptocurrency market cap dropped from over $3.7 trillion to $3.37 trillion.
The rebound was likely spurred by the encouraging U.S. Personal Consumption Expenditure (PCE) report. The headline PCE, the Federal Reserve’s preferred inflation gauge, eased from 0.2% in October to 0.1% in November. Core PCE also decreased from 0.3% to 0.1%, indicating a slowdown in inflation in urban and rural areas. American stocks reacted positively to the PCE report on Friday, with the Dow Jones, S&P 500, and Nasdaq 100 indices rising by over 1.18%, 1.10%, and 0.85% respectively.
These developments came a few days after a hawkish Fed decision triggered a sell-off in risky assets such as stocks and cryptocurrencies. The Fed cut rates by 0.25%, bringing the yearly cuts to one percent, and hinted at two more cuts in 2024, while the last meeting’s dot plot suggested four cuts. The Fed justified its hawkish stance due to stubbornly high inflation, as recent data showed the headline Consumer Price Index rising to 2.7% and the core CPI remaining at 3.3%. There are also concerns that some of President-elect Donald Trump’s policies (like tariffs) could be inflationary.
However, there are risks for the ongoing rebound. It could be a dead cat bounce, where falling asset prices briefly rebound before resuming the downward trend. For instance, Shiba Inu previously dropped by 15% on Dec. 9 and 1% on Dec. 10, then had a seeming rebound with a 6% increase on Dec. 11 before resuming its downtrend and hitting a low of $0.00001855 on Dec. 20. Another potential risk, especially for Shiba Inu, is that it has formed a head and shoulders chart pattern. With a neckline at $0.00002280, this is a bearish reversal sign suggesting the coin may continue its downtrend.
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