The cryptocurrency market has just witnessed a period of intense volatility, especially with Bitcoin as recent bullish momentum has faced obstacles due to weak demand in the US and the decline of the AUD/JPY exchange rate. This is seen as an important indicator of risk sentiment. The AUD, which is linked to the global economic situation, has weakened against the JPY - a safe-haven currency, creating a risk-averse environment in the market.
Analyst Matt Simpson has warned that a prolonged decline of AUD/JPY could lead to a wider risk aversion in the financial markets. Historical trends show an inverse correlation, as the previous drop of AUD/JPY was followed by a sharp fall in BTC price from around $70,000 to $50,000.
Current economic indicators suggest the possibility of interest rate hikes by the Bank of Japan, along with speculation about future rate cuts by the Federal Reserve, increasing market uncertainty. If the Yen continues to strengthen, Bitcoin prices could drop further, potentially below $90,000.
Ki Young Ju, founder and CEO of CryptoQuant, believes that an altcoin season - a time when altcoin prices rise after a Bitcoin bull wave - will depend on new capital inflows from retail traders. He notes that currently institutional investments are locked in trading funds, making it difficult to transfer profits from major coins like Bitcoin or Ethereum to altcoins.
Mr. Ju emphasizes the need for altcoins to develop independent strategies to attract new capital flows instead of relying on the success of Bitcoin. While still quite optimistic about altcoins, he also mentioned that it is necessary to stimulate the fear of missing out (FOMO) from retail investors to drive new investments.
Additionally, trader Willy Woo notes that altcoin seasons may weaken in future market cycles. Some signs indicate a resurgence of interest from retail traders, such as the increase in open interest in the Ethereum futures market and significant investments in MicroStrategy's shares from retail traders.
