The cryptocurrency market corrected sharply on May 12 after the hype surrounding domestic dog-themed tokens was deflated when Ethereum co-founder Vitalik Buterin dumped vast amounts of the previously hot Shiba Inu (SHIB), Dogelon Mars (ELON) and Akita Inu (AKITA) on the market and donated the gain to charity.

Data from Cointelegraph Markets and TradingView shows that equally meme tokens sold off, Bitcoin (BTC) cost continued its recent weakness and declined nearly 8% decline to $53,500 earlier recovering to $54,700.

BTC/USDT 4-hour nautical chart. Source: TradingView

Ether (ETH) was less afflicted by the sell-off and actually managed to recover above $4,000 to reclaim its daily losses as users of the network applauded Buterin's decision to donate his meme coins to various charities. Traders are also hopeful that the decreased trading activity in meme tokens will help push downwards gas fees on the Ethereum network.

Traders are unsure virtually what's side by side for Bitcoin and Ether

As the trading activity of meme tokens declines, traders may plough their attending dorsum to Bitcoin only at that place is a certain degree of doubtfulness regarding what might happen next.

According to Chad Steinglass, the head of trading at crypto capital letter markets firm CrossTower, "BTC is really doing a reasonable chore of performing like a store of value" especially when compared to wider fiscal marketplace developments, including the serious pressures facing growth equities which were "exacerbated by the May 12 CPI print which is being interpreted as a trigger for before Fed tightening."

Steinglass highlighted the fact that Bitcoin'due south struggle to escape the trading range it has been in for three months may be a symptom of its new role as a store of value and he hypothesized that traders who concord BTC in their investment portfolios may exist "selling BTC and particularly GBTC in order to raise cash liquidity as they lower their overall leverage."

Steinglass said:

"Against these headwinds, BTC has been more often than not holding its ground. It's had some quick moves but has seen strong support on any real significant sell-off. Perhaps it really is maturing into a more stable nugget, at least for the moment."

When it comes to Ether, Steinglass indicated that "ETH is in a new government of price discovery" due to "upcoming changes in the protocol which will both remove inflation and also create incentive to hold tokens for proof of pale," making it hard to know what a "practiced new off-white value for ETH will exist."

Regarding Ether, Steinglass said:

"Nosotros could easily have more room to run, though if in that location wait to be any hiccups in the upgrades that could derail things speedily."
ETH/USDT 4-60 minutes chart. Source: TradingView

Further insights into Ether's prospects were provided by David Lifchitz, managing partner and chief investment officer at ExoAlpha, who pointed to Ether's "torrid run" thus far in 2021 which has seen its toll grow more than than 455% year-to-engagement and a 100% rally in just the terminal three weeks peradventure serving as a "purchase the rumor, sell the news setup" alee of the upcoming July EIP 1559 upgrade.

Lifchitz said:

"If you've been in even a few weeks, taking some turn a profit off the table wouldn't injure. What hurts in the long term is not missing out on the terminal motility up, merely remaining invested when the music stops."

And equally far equally Bitcoin is concerned, Lifchitz highlighted concerns regarding the range-bound trading BTC has been stuck in lately.

Lifchitz said that Bitcoin is currently showing:

"No upside (nor downside) goad in sight, the risk of remaining fully exposed far outweigh the potential render."

Financial markets fall due to inflation fears

Equities markets also experienced a sell-off due to fears of rising inflation which has been seen creeping higher across numerous sectors of the economy.

Contempo data from the consumer price index indicates that prices have been rising at their fastest pace since Apr 2007 and some economists cautioned that the metric shows no signs of slowing downwardly for the foreseeable future.

As a result of this pressure, the S&P 500, Dow and NASDAQ all saw significant declines on Wednesday and closed the trading day downwardly 2.fourteen%, 1.99% and 2.67% respectively.

Despite the market place downturn, altcoins like AAVE gained 30%, while Polygon (MATIC) and Kusama (KSM) both gained xviii%.

Daily cryptocurrency market performance. Source: Coin360

The overall cryptocurrency market cap at present stands at $2.414 trillion and Bitcoin's dominance charge per unit is 42.2%.

The views and opinions expressed here are solely those of the writer and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your ain enquiry when making a decision.