The Major 2022 Threat to Dogecoin and Shiba Inu No One Is Talking About

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The Federal Reserve wants to raise interest rates three times this year. If that happens, risky investments could drop the most as investors seek safer returns.

Key points

• A new report suggests that Fed interest rate hikes this year could put Dogecoin and Shiba Inu returns in the doghouse.
• As borrowing gets more expensive and corporate profits get squeezed due to rate hikes, risk-averse investors are likely to move funds to “safe haven” investments such as adjustable bonds.
• According to the report, an exodus from highly speculative assets such as Dogecoin and Shiba Inu could dramatically hurt those cryptos.

Last week, chief commodity strategist at Bloomberg, Mike McGlone, issued his latest research report titled — “Crypto Outlook: Don’t Fight the Fed” — which looks at the impact of pending government interest rate hikes on cryptocurrencies. While McGlone’s outlook is not good for thousands of the no-name crypto projects out there, he says Dogecoin (DOGE) and Shiba Inu (SHIB) are likely to be hit especially hard.

Rising inflation forces the Fed to try and cool the economy

Since May 2021, monthly year-over-year inflation has exceeded 5%. Last month, Fed Chair Jerome Powell announced that the Federal Open Market Committee could raise interest rates three times this year to cool down the economy to slow inflation. The Fed has further suggested since then that the first rate hike could occur as soon as March 2022.

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Generally speaking, when interest rates rise investors tend to migrate from high-risk, speculative investments to safer options. According to McGlone that financial…