Altcoins
What are the reasons for the hemorrhaging in the crypto market and when it could stop: Michaël van de Poppe
In a video posted earlier today, crypto analyst Michaël van de Poppe, also known as “Crypto Michaël,” delved into the reasons behind the current altcoin price collapse and offered a glimpse into the future of the cryptocurrency market.
Michaël began by acknowledging the significant slowdown in the altcoin market, with some major altcoins falling more than 40% over the past two weeks and on-chain altcoins crashing more than 70%. He highlighted the inherent volatility of altcoins, which can experience rapid gains followed by severe corrections.
One of the main reasons for the current crash, according to Michaël, is the uncertainty surrounding Ethereum spot ETFs in the United States. Michaël pointed out that although these ETFs have been approved by the US SEC, they are not yet listed, creating confusion and impacting the market. feeling. He explained the two-part approval process involving Forms 19b-4 (which covers technical details and SEC compliance) and Forms S1 (which involves the actual exchanges listing ETFs). The listing delay contributed to downward pressure on the market.
Michaël noted that the approval of Ethereum spot ETFs would likely classify Ethereum as a commodity, similar to Bitcoin. He believes this classification could lead to increased institutional investment and wider acceptance of Ethereum and other cryptocurrencies.
Michaël then discussed another important factor influencing the market, namely recent macroeconomic data, including the US Consumer Price Index (CPI) and the US Producer Price Index (PPI). Both indicators showed lower-than-expected inflation, which initially suggested a potential end to rate hikes by the Federal Reserve. However, the Fed’s more hawkish stance has led to continued uncertainty. Michaël highlighted that altcoins perform best in environments of low interest rates and high liquidity, conditions that are currently not met.
The strength of the US dollar and its impact on the cryptocurrency market were also discussed. A strong dollar generally leads to weaker performance of risk assets like cryptocurrencies. Michaël added that recent decisions by the European Central Bank (ECB) to cut rates have further strengthened the dollar, adding to pressure on the crypto market.
Despite the current slowdown, Michaël remains optimistic about the potential for a market turnaround. He believes that the US listing of Ethereum spot ETFs, expected in the coming months, could act as an important catalyst for an uptrend. He mentioned that historical patterns, such as price action following the approval of the Bitcoin ETF, suggest that initial corrections could be followed by substantial gains.
Michaël also highlighted the importance of Bitcoin’s dominance and its impact on altcoins. While Bitcoin dominance remains high, altcoins are underperforming. However, he predicts that a reversal in Bitcoin’s dominance could signal the start of a new altcoin rally.
In his technical analysis, Michaël pointed out several critical support levels for Ethereum against Bitcoin and stressed the importance of holding these levels to trigger a potential reversal. He also discussed the importance of macroeconomic indicators such as the strength of the dollar and US Treasury yields, which influence market movements.
Featured image via Pixabay