What seemed like a promising week for crypto turned sour as Bitcoin (BTC) dropped to its lowest price in four weeks, falling over 2% to $65,100 during the U.S. trading session from around $67,000. Over the past seven days, BTC has seen a 7.5% decline. When Bitcoin prices drop, other cryptocurrencies, known as altcoins, often follow.
Analyzing the catastrophic event, Crypto analyst Michaël van de Poppe, known as “Crypto Michaël,” has analyzed the crash in altcoin prices and provided insights into the cryptocurrency market’s future. He noted that major altcoins have dropped by over 40% in the past two weeks, with on-chain altcoins plummeting by over 70%. He also highlighted the impact of Bitcoin dominance on altcoins, predicting a reversal in Bitcoin dominance could signal a new altcoin rally.
Many in the crypto sphere are questioning why altcoins are crashing so significantly.
We’ve got some answers for you.
Uncertainty Surrounding Spot Ethereum ETFs
One of the primary reasons for the current crash, according to Michaël, is the uncertainty surrounding spot Ethereum ETFs in the U.S. 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 19b-4 forms (covering technical details and SEC compliance) and S1 forms (related to listing on exchanges). The delay in listing has contributed to downward pressure on the market.
Michaël believes that once spot Ethereum ETFs are listed, Ethereum could be classified as a commodity similar to Bitcoin. This classification could attract increased institutional investment and wider acceptance of Ethereum and other cryptocurrencies.
Macroeconomic Factors and Market Impact
Michaël noted that lower-than-expected U.S. inflation initially suggested a potential halt in Fed rate hikes, but the Fed’s hawkish stance maintains uncertainty. Altcoins thrive in low interest rates, and high liquidity environments, which are currently lacking. A strong dollar, bolstered by recent ECB rate cuts, is also pressuring the crypto market.
Is a Reversal on the Cards?
Despite the current negative sentiment, there are signs of a potential rebound. Michaël is optimistic about a market reversal, in the next 1-2 weeks. He also emphasizes the importance of Bitcoin’s dominance on altcoins, as altcoins are underperforming due to its high dominance. A reversal in Bitcoin dominance could signal a new altcoin rally.
Key Support Levels
Michaël highlighted key support levels for Ethereum against Bitcoin, emphasizing their significance for potential reversal. However, he also noted that macroeconomic indicators like dollar strength and US treasury bond yields affect market movements.
Only time will tell if the altcoin market rebounds or if this is a sign of a more significant shift. Stay tuned for further updates!