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![A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.](https://cdn-dfpai.nitrocdn.com/gJsEsVaCFesDAEYOdjncMdcuJdoeUsXv/assets/static/optimized/rev-b488924/wp-content/uploads/2022/05/think-1.jpg)
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This text was initially printed on Fool.com. All figures quoted in US {dollars} until in any other case said.
What occurred
Right now, cryptocurrency traders are seeing some consolidation following a rally this week that introduced the crypto sector above the vital $1 trillion valuation mark. With the general market down 5.5% over the previous 24 hours as of this morning’s session, it is clear some revenue taking is so as after a fairly rosy begin to this week.
Nonetheless, for meme token traders, right this moment’s decline has been rather more steep. Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE), two of probably the most outstanding meme tokens, dropped 10.1% and eight.5%, respectively, over the previous 24 hours as of 10:45 a.m. ET. Different meme tokens which have gained in reputation with traders of late, corresponding to ApeCoin (CRYPTO: APE) and STEPN (CRYPTO: GMT), additionally noticed double-digit declines over the identical timeframe.
Accordingly, many traders could also be asking, “What offers?”
Properly, right this moment’s decline truly started yesterday afternoon, following a fairly attention-grabbing Tesla (NASDAQ: TSLA) earnings name. CEO Elon Musk famous he bought 75% of his Bitcoin (CRYPTO: BTC) holdings over the previous quarter, in a bid to spice up the corporate’s liquidity within the face of provide chain points and different macro components. Whereas Musk additionally reiterated his assist for Bitcoin over the long run on the decision, suggesting he might add to his place sooner or later, the electrical automobile maker did beforehand retract the flexibility for the token for use as fee for Tesla autos following a short-lived experiment.
Musk additionally said that Tesla hasn’t bought any of the Dogecoin it holds. How a lot is held, and whether or not this token will likely be used for something apart from merchandise gross sales sooner or later, stays unsure.
So what
Musk’s huge Bitcoin divestiture despatched a fairly robust sign to the market that Tesla’s view of Bitcoin as a long-term funding has shifted. In a tweet he despatched in Might of final 12 months, he famous, “Tesla won’t be promoting any Bitcoin and we intend to make use of it for transactions as quickly as mining transitions to extra sustainable power.” As with something Musk says, traders who did not take these feedback with a (huge) grain of salt have been disenchanted.
That mentioned, his obvious assist for Dogecoin (relative to Bitcoin) is notable. In earlier interviews, Musk has indicated that his assist for meme cash has been pushed by a sense that he is serving to out smaller traders by remaining bullish. Whether or not that is a sign this bullish stance will maintain ceaselessly or — like his views on Bitcoin — is a shifting goal stays to be seen.
Right now’s value motion amongst most cryptocurrencies, and particularly meme tokens, suggests the market is not shopping for any of it.
Now what
The truth that a single man can have such an impression on a $1 trillion sector is fairly unimaginable. Buyers contemplating any of those extremely volatile digital tokens ought to contemplate that actuality earlier than leaping in. Certainly, Musk’s unpredictable nature provides to the potential volatility these tokens may see shifting ahead.
Given the place we’re at available in the market cycle, and the macro headwinds that stay, right this moment’s sell-off seems to be warranted. I am certain meme token traders will likely be watching how Musk pivots from right here. If one factor is for certain, it is that nothing is a certain factor on the earth of memes.
This text was initially printed on Fool.com. All figures quoted in US {dollars} until in any other case said.
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