Why Altcoins Got Socked This Week
There have been many spectacular weeks to own altcoins and, as with any volatile asset class, plenty of bad ones to match. This past week, unfortunately, belonged to the second category, with fresh fears about the macroeconomy dinging the value of more than a few coins and tokens.
A big clutch of altcoins took double-digit hits across the period. According to data compiled by S&P Global Market Intelligence , Toncoin (CRYPTO: TON) fell by 14%, Polygon (CRYPTO: MATIC) did slightly less badly with a 13% decline, and Aptos (CRYPTO: APT) exceeded them both by tumbling nearly 17%.
Downside surprise
Much of the bearish action in crypto trading occurred on Friday, following the Bureau of Labor Statistics' release of the latest unemployment data. Although none of the data were alarming, they weren't all that inspiring, either. They revealed that employers in this country added 142,000 jobs in August.
That was notably below the average 165,000 estimated by economists and provided a new worry to holders of coins and tokens. A tighter labor market, theoretically, increases the chances the Federal Reserve (Fed) will aggressively cut its key interest rates , while a weaker-than-expected one could make it more cautious in the cutting.
Prior to the August jobs report, many economists and more than a few crypto-heads were banking on the Fed reducing rates by 50 basis points. Post-report, that scuttlebutt seems to center around the 25 basis-point level. If the regulator is in a particularly cautious mood it might, in line with recent habit, leave rates untouched entirely.
Why would crypto investors and speculators care what the Fed does? Because interest rates have an impact on the overall level of risk market players are willing to accept. All things being equal, lower rates make reliable investments like government debt less attractive -- and, conversely, increase the appeal for higher-risk assets such as cryptocurrencies.
Discounts abound
With the frequently violent gyrations in cryptocurrency prices, it's easy to get panicky when they slide in value or overly bullish when they're on the rise. This goes doubly when major economic data surprises on either the upside or downside.
So in times like this, folks interested in crypto should be cautious and picky. Now's probably not a good time to snap up some meme coins, for example. That's because the coins and tokens linked to more utilitarian platforms will probably rise faster when the next rally comes. Toncon, Polygon, and Aptos, then, look pretty good from that perspective now.
Before you buy stock in TON, consider this:
