Investors in cryptocurrencies and other risk assets are once again licking their wounds today. Specifically, those invested in top crypto projects ChainLink (LINK -0.54%), Polkadot (DOT -0.06%), and XRP (XRP 10.54%) have seen 24-hour declines of 7.9%, 7.2% and 5%, respectively.
It appears that once again, macro factors are dominating the headlines for both crypto and stocks. This week happens to host a highly anticipated FOMC decision. Expectations have now increased to factor in a potential 100-basis point (1%) hike, though most expect the Fed to continue hiking at a 75 bps pace.
Higher bond yields have flowed through to valuations across all risk assets, with most major markets seeing declines this morning. Investors banking on the next monetary policy-fueled bull market may have to wait longer, suggesting more near-term downside could be on the horizon for more aggressive investors.
Overall, the crypto market has seen some steep declines over the weekend and into this morning. However, as of 2:30 p.m. ET, the overall market is actually trending higher, up 2.3%. Accordingly, the returns these top 25 tokens have seen are notable.
Interestingly, ChainLink, Polkadot, and XRP are each projects with their own set of tailwinds. ChainLink recently announced four integrations and partnerships within the crypto sector tied to the project’s oracle network. Polkadot has been a trending crypto, in part due to this project’s recognition as a “top 5 financial income crypto.” And XRP has pushed for a ruling on whether the project is a security (which, should the ruling be favorable, could be a big upside catalyst).
Thus, it appears macro forces remain much stronger influences on the underlying value of cryptos relative to any sort of token-specific drivers right now.
Moving forward, crypto investors appear to remain hostage to the whims of central banks, which are intent on stomping out inflation at nearly any cost. Other macro factors, such as a strong U.S. dollar, as well as sector-specific regulatory headwinds, also hang over this once-high-flying sector. Accordingly, the bearish stance most investors appear to be taking right now is one that aligns with the direction of policymakers.
Until there’s some sort of pivot, either from central banks around the world or regulators, investors in even the most well-renowned crypto projects such as ChainLink, Polkadot, and XRP may be in for more near-term pressure. Over the medium and long term, these tokens may take on a better trajectory. But right now, this is the market we’re all in, for better or worse.