A promising week for cryptocurrencies ended with Bitcoin (BTC) falling to its lowest price in four weeks, dropping more than 2% from around $67,000 to $65,100 during U.S. trading. Over the past seven days, BTC has fallen 7.5%. When Bitcoin falls, other cryptocurrencies, known as altcoins, typically follow.
By analyzing this catastrophic event, cryptocurrency analyst Michaël van de Poppe (nicknamed "Crypto Michaël") analyzed the reasons for the collapse of altcoin prices and provided insights into the future of the cryptocurrency market. He pointed out that in the past two weeks, the prices of major altcoins have fallen by more than 40%, and the prices of on-chain altcoins have plummeted by more than 70%. He also emphasized the impact of Bitcoin's dominance on altcoins, predicting that the reversal of Bitcoin's dominance may herald a new round of altcoin rebound.
Many in the crypto space are questioning why altcoins have plummeted so quickly.
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We've got some answers for you.
Uncertainty about Ethereum spot ETF
Michaël believes that one of the main reasons for the current crash is the uncertainty surrounding US spot Ethereum ETFs. Although these ETFs have been approved by the SEC, they have not yet been listed, which has created confusion and affected market sentiment. Michaël explained the two-part approval process, including Form 19b-4 (covering technical details and SEC compliance) and Form S1 (related to listing on an exchange). The delay in listing has exacerbated the downward pressure on the market.
Michaël believes that once a spot Ethereum ETF is listed, Ethereum can be classified as a commodity similar to Bitcoin. This classification can attract more institutional investment and lead to wider acceptance of Ethereum and other cryptocurrencies.
Macroeconomic factors and market impact
Michaël noted that lower-than-expected U.S. inflation initially indicated that the Fed's rate hikes may have stopped, but the Fed's hawkish stance still brings uncertainty. Altcoins thrive in low interest rates and high liquidity environments, which are not available at present. The strengthening of the U.S. dollar, boosted by the European Central Bank's recent rate cuts, also put pressure on the cryptocurrency market.
Is a reversal imminent?
Despite the current negative market sentiment, there are signs of a rebound. Michaël is optimistic about a market reversal in the next 1-2 weeks. He also stressed the importance of Bitcoin’s dominance over altcoins, which have underperformed due to their high dominance. A reversal in Bitcoin’s dominance could herald a new rally for altcoins.
Key Support Levels
Michaël highlighted Ethereum’s key support levels against Bitcoin, stressing their importance for a potential reversal. However, he also noted that macroeconomic indicators such as a stronger dollar and U.S. Treasury yields can also influence market movements.
Only time will tell if the altcoin market will rebound, or if this is a sign of a more significant shift.
