If the Dogecoin (CRYPTO: DOGE) price was pulling a yoga pose, it would be the downward dog. Because that's where it has been heading during May.
Despite a sprinkling of positive news items for the Shiba Inu dog-inspired cryptocurrency, it simply has not been enough to counter the widespread negative sentiment. Ultimately, gravity has dragged this little doggy down 37% since the beginning of the month. For context, the market capitalisation of the global crypto market retracted by 28% in May.
So, what steered the Dogecoin price off track?
Image source: Getty Images
Fed bites after barking
While it might have been a difficult month for Dogecoin 'hodlers' (the term for those who buy and hold crypto), the pain was felt across the board for cryptocurrency investors. This, in conjunction with the lack of Dogecoin-specific negative events, suggests that the trajectory was more of a macroeconomic influence.
Demonstrating its resolve to bring inflation back in line, the US Federal Reserve raised interest rates by 50 basis points to 0.75% earlier this month. At the same meeting, the United States' central bank informed onlookers that it won't hesitate to jack up rates further to calm inflation.
The decision sent a shock down the spine of investors in the riskier end of town. Consequently, tech stocks and cryptocurrencies began their descent via the elevator.
As pictured above, the Dogecoin price has underperformed its larger peers: Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH). However, the general trend is shared across all three following the Fed's decision to increase interest rates.
As a result, news of Dogecoin being adopted by luxury fashion brand Gucci throughout the month failed to gain traction.
Dogecoin price snapshot
Unfortunately, the Dogecoin price hasn't received any pampering so far this year. Investors of the meme coin are now down 50% since the year kicked off. For comparison, Bitcoin has held onto more of its value, only falling 35% over the same timeframe.
