Altcoins
Why are Altcoins collapsing? Here are the main reasons
What looked like a promising week for cryptocurrencies turned sour as Bitcoin (BTC) fell to its lowest price in four weeks, falling more than 2% to $65,100 during the US trading session from around $67,000. Over the past seven days, BTC has seen a decline of 7.5%. When Bitcoin prices fall, other cryptocurrencies, known as altcoins, often follow.
Analyzing the catastrophic event, Crypto analyst Michaël van de Poppe, known as “Crypto Michaël”, has analyzed the collapse of altcoin prices and provided insights into the future of the cryptocurrency market. He noted that major altcoins have fallen more than 40% in the past two weeks, with on-chain altcoins falling more than 70%. He also highlighted the impact of Bitcoin’s dominance on altcoins, predicting that a reversal of Bitcoin’s dominance could signal a new altcoin rally.
Many in the cryptocurrency world are wondering why altcoins are dropping so significantly.
We have some answers for you.
Uncertainty about Spot ETFs on Ethereum
One of the main reasons for the current collapse, according to Michaël, is the uncertainty surrounding spot Ethereum ETFs in the US. Although approved by the SEC, these ETFs are not yet listed, causing confusion and affecting market sentiment. Michaël explained the two-part approval process involving Forms 19b-4 (covering technical details and SEC compliance) and Forms S1 (related to stock market listing). The delay in listing contributed to downward pressure on the market.
Michaël believes that once Ethereum spot ETFs are listed, Ethereum could be classified as a commodity similar to Bitcoin. This classification could attract greater institutional investment and broader acceptance of Ethereum and other cryptocurrencies.
Macroeconomic factors and impact on the market
Michaël noted that lower-than-expected US inflation initially suggested a potential pause in rate hikes by the Fed, but the Fed’s aggressive stance maintains uncertainty. Altcoins thrive in low interest rates and high liquidity environments, which they currently lack. A strong dollar, supported by recent ECB rate cuts, is also putting pressure on the cryptocurrency market.
Is there a reversal on the cards?
Despite the current negative sentiment, there are signs of a potential recovery. Michaël is optimistic about a market turnaround in the next 1-2 weeks. He also highlights the importance of Bitcoin’s dominance over altcoins, as altcoins are underperforming due to their high dominance. A reversal of Bitcoin’s dominance could signal a new altcoin rally.
Key levels of support
Michaël highlighted key support levels for Ethereum versus Bitcoin, underlining their importance for a potential reversal. However, he also noted that macroeconomic indicators such as the strength of the dollar and US Treasury yields influence market movements.
Only time will tell whether the altcoin market will recover or whether this will be a sign of a more significant shift. Stay tuned for further updates!