What happened
It's been a rough day for cryptocurrency investors today, with the entire crypto market losing just under 3% at the time of writing. However, the 24-hour moves for Dogecoin (CRYPTO:DOGE), Shiba Inu (CRYPTO:SHIB), and Fantom (CRYPTO:FTM) have been among the outsize losses many investors are watching today. These three tokens are down 3%, 4.5%, and 9.3%, respectively, over the past 24 hours.
For meme tokens Dogecoin and Shiba Inu, today's move appears to be closely tied to concerns around the debt ceiling, which are materializing in a very negative way for higher-risk assets. A wide range of tech stocks, meme stocks, and other more speculative risk assets are selling off, as the prospect of a near-term crisis weighs on expectations around near-term interest rates and valuations.
Fantom is declining on its own set of headwinds today. Users of cross-chain router Multichain have reportedly seen delays in withdrawing their money from this protocol following an upgrade. This has led to a significant drop in value for Multichain's MULTI token, but has also impacted other crypto projects with close ties to the router. As it happens, the Fantom Foundation has been withdrawing funds from Multichain, but has received scrutiny for not acting quicker when problems became clear in recent days.
So what
When times are good, assets that are higher-beta (or move faster in either direction than the overall market) tend to surge to a much greater degree. The previous parabolic moves seen in Dogecoin and Shiba Inu highlight what high-beta assets can do in a bull market environment.
However, when risk assets are selling off, momentum can work in the opposite direction. This is the key risk investors face when considering whether to ride momentum-heavy speculative assets. Any sort of mass selling pressure can produce further downside pressure for these meme tokens, and that's something existing token holders will need to take into account over the next week or so, until this debt ceiling issue is resolved.
In the case of Fantom, it's clear investors are not excited about the speed at which those at the Fantom Foundation acted when concerns around Multichain rose. Now, Multichain has suggested that this delay will be short-lived, and is due to an ongoing upgrade, with one router left to be upgraded. Once this upgrade is finalized, perhaps there will be nothing to see here, and investors will suggest that those on the Fantom team acted too briskly.
Now what
This year has been much better for more speculative assets, and with an overall surge in the valuations of various top cryptocurrencies, investors of all stripes have increasingly looked at ways of generating greater returns over the near term via riding assets which carry higher momentum than stocks or bonds.
Of course, risks with such a strategy are pronounced, and today's price action is the latest indication that near-term volatility is likely to remain present in the crypto space. Whether it's macro concerns or various technical issues driving bearish sentiment, when the tides turn, they turn in a hurry.
