What happened
At this point in their evolution, cryptocurrencies aren't turning into the hedge against market negativity that some investors thought they might. While the price of gold hit $1,900 per ounce for the first time since June 2021, cryptocurrencies are falling as geopolitical tensions rise. Leading the way among the bigger names today is Shiba Inu (SHIB 2.66%), which dropped almost 10% early Sunday. The meme coin was still trading down 8.2% as of noon ET Sunday.
So what
With the prospects of a Russian invasion into Ukraine seemingly increasing, Shiba Inu wasn't the only cryptocurrency dropping. The price of Bitcoin also hit $38,000 for the first time in two weeks today. It is starting to look like gold and other precious metals may hold on to their place as leading market hedges against uncertainty and inflation.
Image source: Getty Images.
Now what
There was also another recent sign that cryptocurrencies are being treated more like equities. Federal Reserve officials have been under increased scrutiny over the last year concerning personal investments in stocks and bonds that may appear to have a conflict with central bank decisions. On Friday, new regulations were formally announced where Fed officials won't be able to trade assets that include stocks and bonds, as well as cryptocurrencies.
Those rules will take effect May 1, and some investors may view it as another sign that cryptocurrency coins like Shiba Inu won't provide the balancing force in their portfolios that they intended.
Some early investors have been wildly successful with bets on Shiba Inu. But for the values of cryptocurrencies in general to have staying power, there will need to be use-cases for them that might range from alternative currencies to stores of value against inflation and other things that tend to negatively affect markets. Recent events aren't supporting the latter, and Shiba Inu dropped accordingly today.
