Altcoins
Why are Altcoin prices falling and when will they recover?
Altcoin prices have noticed volatile trading in recent days, with Ethereum, Solana XRP, and others noticing declines. Meanwhile, the decline of the overall cryptocurrency market also followed the collapse in the price of Bitcoin, sparking discussions about the potential reasons behind the collapse.
A flurry of macroeconomic factors and global trends may have weighed on sentiment recently. So, here we take a look at the main reasons behind the recent price decline.
Why are Altcoin prices falling?
Some of the major reasons behind the recent sell-off include:
Outflow of Bitcoin ETFs
After witnessing robust inflows in recent weeks, the Spot Bitcoin ETF in the United States recorded an outflow of $200.4 million on Monday, June 11. This sudden turnaround has weighed on broader market sentiment, which may have contributed to the recent collapse in altcoin prices.
The robust influx in Bitcoin ETFs has so far fueled market optimism, triggering a rally in the price of Bitcoin in recent weeks. Furthermore, altcoin prices also followed suit, recording significant gains, before noticing a decline compared to last week.
US Jobs Data Triggers Altcoin Decline
The past few weeks US employment data turned out to be stronger than expected, dampening investors’ hopes of a potential accommodative stance from the US Federal Reserve. In particular, the Federal Reserve has remained aggressive with its rate plans this year, to combat red-hot inflation.
That said, the European Central Bank (ECB), which has maintained a similar stance, announced a rate cut last week. While expectations for a similar move by the U.S. central bank also subsequently rose, labor market data diminished hopes as the market awaits further economic clarity.
Read also: June 2024 Fed Meeting: Why Interest Rate Cuts Might Not Happen At All?
Inflation, the FOMC and the Fed Chair’s comment will impact the performance of altcoins
After last week’s gloomy economic data, investors are now eagerly awaiting today’s US CPI inflation data. FOMC interest rate decisionsand Fed Chair Jerome Powell’s press conference. THE United States Consumer Price Index (CPI)
the data will provide insight into the current level of inflation in the nation, a crucial factor in deciding the future of altcoin prices. Additionally, the market will also be keeping an eye on tomorrow’s US PPI data for further guidance on inflation.
On the other hand, the FOMC’s interest rate decision will play a crucial role in shaping the market performance in the coming days. While the market expects the Federal Reserve to maintain its policy rate, any other decision could impact the market. At the same time, Fed Chair Jerome Powell’s remark will provide insight into the central bank’s potential future move regarding interest rate plans.
Considering this, the market appears to be taking a breather before crucial events, potentially causing a more volatile scenario altcoins prices.
When will Altcoin prices recover?
The overall cryptocurrency market has also witnessed volatile trading prior to previous FOMC events this year. However, immediately after the event, the overall market experienced a strong recovery, erasing the losses recorded before the event.
Given this, market experts expect a recovery in altcoin prices immediately after the event. But despite the anticipation, it is also worth noting that if the US CPI data turns out to be hotter than expected, this could extend the ongoing volatility in altcoin prices. At the same time, the Fed’s comment, especially if the central bank takes an aggressive stance, will also impact overall market sentiment.
At the time of writing, Solana price fell 1.32% and traded at $152.67, while XRP Price fell 0.54% from yesterday to $0.484. In the meme coin industry, Dogecoin price fell 1.08% to $0.1405, with Shiba Inu Price falling 0.71% to $0.00002207.
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