Markets
Three reasons why Altcoins are suffering and when they will recover
While Bitcoin remains in consolidation, about 10% off its all-time high, altcoins are collapsing and erasing most of the gains made during the crypto market rally in March.
Calls for other season have declined and the overall crypto market and social sentiment is weak.
Several factors are contributing to this decline in the altcoin, as market analyst and founder of MN Trading Michaël van de Poppe pointed out on June 15.
Reasons why Altcoins are falling
Ethereum generally leads the altcoin markets and has fallen 10% since the end of May. There is currently a lot of uncertainty surrounding Ethereum exchange-traded funds since they have been approved but have not yet been listed for trading.
If spot ETH ETFs launch soon – Bloomberg analysts have seen on July 2 – this could provide a big boost to altcoins since ETH will be considered a commodity rather than a security.
“There will be a lot more happening in the Ethereum ecosystem,” the analyst said, adding that almost all cryptocurrencies could be considered commodities.
Another factor weighing on the altcoin markets is the United States. economic data and persistently high inflation, preventing the Federal Reserve from cutting rates.
“Altcoins thrive best during periods of quantitative easing and low interest rates,” when liquidity in the global economy increases, he says. said.
This has been seen in previous cycles as altcoins do well when money is cheap to borrow and rates are low.
High BTC dominance
The decline is not going to continue, he added, noting that Bitcoin’s dominance is also an important factor. BTC dominance is currently high at 55.4% and has been increasing since December, according to at Tradingview.
“Given that the Ethereum ETF will be listed in the coming weeks, it seems very likely that a rotation will occur and this level of Bitcoin dominance will not persist.”
In an article on X on June 15, the crypto trader “cyclop” said that altcoins peaked exactly 546 days after being halved in the last two cycles before being added,
“If the cycle repeats, now is your last chance to buy the dip before the alts go parabolic.”
The total market capitalization remained stable this weekend at $2.54 trillion, according to CoinGecko. Bitcoin remains in its bound channel, but most altcoins continue to decline.