Most meme coin prices rebounded on Saturday, December 21, after falling for most of the week, with their market cap rising 4.7% to $109 billion.
Shiba Inu (SHIB) price rose by 12.6% to an intraday high of $0.00002397. bonk (BONN), the largest meme coin in the Solana ecosystem, up 20% to $0.000032. peep (PEIP) and other popular meme coins such as Dogwifhat and Pudgy Penguins rose more than 15%.
This rebound occurred after Bitcoin (BTC) drop from $108,200 to $97,000 caused a major crash in most altcoins. The total market cap of all cryptocurrencies fell from more than $3.7 trillion to $3.37 trillion.
The rebound appears to be due to an encouraging US Personal Consumption Expenditure report. Core PCE, the Federal Reserve's preferred inflation gauge, is reduced from 0.2% in October to 0.1% in November. Core PCE fell from 0.3% to 0.1%, a sign that inflation in urban and rural areas was slowing.
American stocks responded positively to the PCE report on Friday, with the Dow Jones, S&P 500, and Nasdaq 100 indexes rising more than 1.18%, 1.10%, and 0.85%, respectively.
These numbers came a few days after the Fed's hawkish decision to encourage selling in risky assets such as stocks and cryptocurrencies. The bank reduced rates by 0.25%, bringing the annual cuts to one percent, and suggested it would deliver two more cuts in 2024. The dot plot of the last meeting indicated four cuts.
The Fed justified its hawkish view on high inflation. Recent data showed that the headline Consumer Price Index rose to 2.7%, while the headline CPI remained at 3.3%. The bank also suspects that some of President-elect Donald Trump's policies (ie, tariffs) will be inflationary.
Raising a Shiba Inu, Bonk, and Pepe could be a dead cat kick
Coins meme like Shiba Inu, Pepe, and Bonk also seems to have jumped as crypto investors bought the dip after falling for three consecutive days.
A potential risk for the ongoing rebound is that this could be a dead cat kick. A DCB is a situation where falling asset prices hold back briefly and then resume the downward trend.
For example, Shiba Inu fell 15% on December 9 and 1% the next day. It then formed a DCB by rising 6% on December 11th and then began its decline, reaching a low of $0.00001855 on December 20th.
The other potential danger to these breeds, especially Shiba Inu, is that some of them have developed a head and shoulders chart pattern.
The H&S pattern is a popular bearish reversal sign consisting of a head, two shoulders, and a neck, which is at $0.00002280. That is a sign that the coin may continue its decline.
