Shiba Inu, Bonk, Pepe prices rebound: Beware of dead cat bounce
Release: 2024/12/22 00:34 Reading: 308
Most meme coin prices rebounded on Saturday, December 21st, after falling for most of the week. Their combined market cap increased by 4.7% to $109 billion.
Shiba Inu (SHIB) price rose by 12.6% to an intraday high of $0.00002397. Bonk (BONK), the largest meme coin in the Solana ecosystem, rose by 20% to $0.000032. Pepe (PEPE) and other popular meme coins like Dogwifhat and Pudgy Penguins increased by over 15%.
This rebound occurred after a Bitcoin (BTC) plunge from $108,200 to $97,000, which triggered a significant crash in most altcoins. The total market cap of all cryptocurrencies dropped from over $3.7 trillion to $3.37 trillion.
The rebound is potentially due to the US's encouraging Personal Consumption Expenditure report. The headline PCE, the Federal Reserve's preferred inflation gauge, softened from 0.2% in October to 0.1% in November. Core PCE dropped from 0.3% to 0.1%, indicating a slowdown in inflation in urban and rural areas.
American stocks reacted positively to the PCE report on Friday, with the Dow Jones, S&P 500, and Nasdaq 100 indices rising by over 1.18%, 1.10%, and 0.85%, respectively.
These numbers came after a hawkish Fed decision triggered a sell-off in risky assets such as stocks and cryptocurrencies. The bank slashed rates by 0.25%, bringing the yearly cuts to one percent, and hinted at two more cuts in 2024. The previous meeting's dot plot indicated four cuts.
The Fed justified its hawkish stance on persistent high inflation. Recent data showed that the headline Consumer Price Index rose to 2.7%, while the core CPI remained at 3.3%. The bank also anticipated that certain policies by President-elect Donald Trump, such as tariffs, could contribute to inflation.
Shiba Inu, Bonk, and Pepe also likely jumped as crypto investors bought the dip after three consecutive days of decline.
One potential risk to the ongoing rebound is that it could represent a "dead cat bounce," which occurs when declining asset prices experience a brief uptick before resuming the downward trend.
For example, Shiba Inu dropped by 15% on December 9th and 1% the following day. It then formed a dead cat bounce by rising by 6% on December 11th before resuming its downtrend, reaching a low of $0.00001855 on December 20th.
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Shiba Inu price has exhibited dead cat bounces in the past | Source: crypto.news
Another potential risk, particularly for Shiba Inu, is the formation of a head and shoulders chart pattern. A head and shoulders pattern is a bearish reversal signal consisting of a head, two shoulders, and a neckline currently at $0.00002280. This pattern suggests the coin may continue its downtrend.
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