Why Shiba Inu was down 10% today

Bitcoin dipped down to $38,000 on Sunday and other cryptocurrencies are following suit.

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A shiba inu dog lying on the sand at a beach.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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 (CRYPTO: SHIB), 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. 

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. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and recommends Bitcoin. The Motley Fool Australia owns and recommends Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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