Despite a good start for the stock market today, cryptocurrencies struggled as investors digested the Federal Reserve's recently released minutes from its May meeting.
At 10:53 a.m. ET, the price of Bitcoin (BTC 0.06%) had fallen roughly 2.2% over 24 hours. Meanwhile, the price of Dogecoin (DOGE 0.18%) was trading 5.7% lower, and the price of Shiba Inu (SHIB -0.23%) was trading 5.5% down.
Yesterday, minutes were released from the Fed's May meeting, which revealed the Fed may be willing to raise its benchmark overnight lending rate, the federal funds rate, potentially more aggressively than the market initially thought. The market has been expecting the federal funds rate to end the year in a range of 2.5% to 2.75%. It's currently in a range of 0.75% to 1% after the 0.25% rate hike in March and then a half-point hike earlier this month.
"Most participants judged that 50 basis point (0.50%) increases in the target range would likely be appropriate at the next couple of meetings," the minutes stated, adding that "a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook."
If the Fed raises rates higher than the market expects, that may not be so great for the likes of Bitcoin and other cryptocurrencies because higher interest rates make safer assets more appealing and riskier assets less appealing.
But there have been several recent voices from the Street saying that Bitcoin may be ready to turn the corner, which is likely good for other cryptocurrencies. JPMorgan Chase analyst Nikolaos Panigirtzoglou and his team have recently come out and said the fair value of Bitcoin is currently $38,000, which implies some good upside from Bitcoin's current price of roughly $29,280 as of this writing. Panigirtzoglou in a research note called Bitcoin a "preferred alternative asset."
"The past month's crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally," he added in the note.
Furthermore, Yves Lamoureux, who heads his own macroeconomic research firm and who advised clients on Bitcoin's impending fall last November, now believes Bitcoin could reach $100,000 by the end of 2023.
"I'm interested in Bitcoin because it is the king and that's where institutional money will flow first. So always stick with the best. Everybody wants to be Bitcoin, but they're not...don't make it complicated, stick with Bitcoin," Lamoureux recently told MarketWatch.
The main trigger event Lamoureux is watching for is Bitcoin miners seeing their rewards for mining new tokens cut in half, which could trim the overall supply, an event that occurs every four years and is slated to happen sometime in early 2024.
Dogecoin and Shiba Inu appear to be following Bitcoin like most of the crypto markets today. I do not know whether JPMorgan and Lamoureux's calls will be right or when Bitcoin will bottom. But I do think the world's largest cryptocurrency is here to stay and do consider it a long-term buy and hold.
I don't see any real reason to invest in Dogecoin and Shiba Inu, but given their current place in the crypto world, they will likely continue to move with the broader crypto market, at least in the near term.