Why Dogecoin, Solana, and Polygon Plunged This Week

It was another poor week for the crypto market as investors sold off cryptocurrencies ahead of Bitcoin‘s (BTC 1.26%) halving. Not only are there projections that Bitcoin could drop, but the tech market has also been falling, and that’s been more correlated with crypto than with anything else.

According to data provided by S&P Global Market Intelligence, Dogecoin (DOGE 1.79%) fell as much as 17.3% this week and is down 10.3% since last Friday’s close as of 1 p.m. ET. Solana (SOL 3.17%) also fell as much as 14.6% but is now down only 3.1%, while Polygon (MATIC -0.02%) dropped 16.4% at its low and is now off 9.1%.

The halving debate

Bitcoin drives the crypto market, there’s no way to get around it. So the upcoming halving has been seen as a bullish catalyst for the industry because previous halvings have resulted in Bitcoin’s price jumping.

But JPMorgan said on Wednesday that Bitcoin will fall after this weekend’s halving because it’s in overbought conditions. Part of that may involve the billions of dollars that have flowed into Bitcoin after crypto exchange-traded funds were approved earlier this year; that flow of funds has slowed down.

Interest rates rise and tech stocks fall

The crypto market was supposed to be a hedge to traditional markets, but over the past three years, crypto only magnified tech and growth stocks’ moves.

This week, these high-volatility segments of the market fell again, in part because interest rates continue to rise, which could hurt the economy.

10 Year Treasury Rate data by YCharts

We haven’t seen higher rates hurt most of the economy yet, but it’s hard to argue they won’t eventually hurt purchases of big items like cars and housing.

Low interest rates were among the catalysts of the crypto boom in 2020 and 2021, so it’s no surprise that higher rates are having the opposite effect.

More from the world of crypto

Ernst & Young revealed that it will use Polygon as a contract management tool for enterprise customers. Using a combination of zero-knowledge proofs and the blockchain, it will keep client information private while storing contracts in public.

Solana is down, but news on the blockchain itself was fairly positive. Coinbase announced that its wallet now fully supports the Solana ecosystem. After a massive run-up over the past year, it’s no surprise that Solana is pulling back, and slow operations on the blockchain haven’t helped investor confidence, either.

Crypto is at a turning point, as some traders continue to view the memes and volatility as key to the ecosystem, while big companies are starting to use the blockchain in productive ways. I’m bullish on the blockchain for productivity, but it seems the memes may still have life in some crypto circles, even after this week’s drop.