What happened
When it rains, it pours. And today, Shiba Inu (SHIB -2.40%) investors feel like a dog that's been put in the doghouse in the midst of a thunderstorm.
Today, Shiba Inu has fallen precipitously, dropping 12.2% over the past 24 hours, as of 12 p.m. ET. This meme token has certainly not benefited from extremely bearish sentiment that's built up across the crypto market today. In totality, the entire crypto sector is now down by more than 11% over the past 24 hours, marking it the worst daily decline in quite some time.
This decline has been driven mainly by worries about the amount of capital flowing into risk assets over the near term. An increasingly hawkish monetary policy stance by the Fed has driven bond yields higher, taking high-growth tech stocks and cryptocurrencies on a downward spiral.
Interestingly, higher correlation has been building for some time between risky equities and crypto tokens. For these past few weeks, it's been difficult to be an investor in Shiba Inu, which is a speculative momentum-driven token.
Image source: Getty Images.
So what
The question many investors now are posing is whether most of the bearish sentiment for this-year's rate hikes is baked in. After all, the past few weeks have been an extraordinarily terrible period for most major crypto tokens, which are now well into bear market territory.
For Shiba Inu, a token that's now lost approximately 3/4 of its value since its peak in Q4, investors certainly hope so. That said, considering this token's multimillion-percentage increase in 2021, bears suggest this token has a long, long way to drop from here.
Now what
Shiba Inu and most dog-inspired meme tokens largely aren't driven by serious fundamentals. Rather, sentiment and momentum appear to play a much bigger role in the returns we've seen with SHIB over the past year. Many attribute the hyperbolic meme mania of 2021 to this token's ability to rise more than 20,000,000% from the start of last year.
Given that we're now seeing a marked shift in investor sentiment, investors are jumping ship. Of course, it's not only Shiba Inu that's seeing these capital outflows. Most major cryptocurrencies, including the three largest tokens in the market, have seen double-digit declines today. It's indiscriminate selling amid market-based fear that's driving the ship right now.
Does that mean it's a great time to buy? Time will tell. For now, investors may want to hold onto their hats; the wind is picking up in crypto land.
