Three Reasons Why Altcoins Are Suffering and When They Will Recover

While Bitcoin is still consolidating, about 10% away from its all-time high, altcoins are collapsing and erasing most of the gains made in the March cryptocurrency market rally.

Calls for an Altseason have waned, the overall cryptocurrency market is down and social sentiment is low.

There are a few factors contributing to this downtrend for altcoins, as Michael van de Poppe, market analyst and founder of MN Trading, explained on June 15.

New video alert! Altcoins are collapsing, and the cryptocurrency markets are in a bear market trend. What's next for cryptocurrencies?

In this video, I explore the factors behind the recent downturn and the potential for a positive turnaround.

do not miss! https://t.co/uqbkVgfI7b

— Michael van de Poppe (@CryptoMichNL) June 16, 2024

Reasons for the decline of altcoins

Ethereum typically leads the altcoin markets, and is down 10% since the end of May. There is currently a lot of uncertainty regarding Ethereum ETFs since they have been approved but not yet listed for trading.

If ETH spot ETFs launch soon — Bloomberg analysts are looking at July 2 — that could provide a big boost to altcoins since ETH would be considered a commodity rather than a security.

“There are a lot of things that are going to happen in the Ethereum ecosystem,” the analyst said, adding that almost all cryptocurrencies can be considered commodities.

Another factor influencing altcoin markets is US economic data and persistent high inflation, which prevents the Federal Reserve from cutting interest rates.

“Altcoins thrive best during periods of quantitative easing and low interest rates,” when liquidity in the global economy increases, He said.

This has been seen during previous cycles where altcoins perform well when money is cheap to borrow and interest rates are low.

BTC dominance is high

The decline will not continue, he added, highlighting that Bitcoin's dominance is also a big factor. BTC dominance is currently high at 55.4% and has been increasing since December, According to To Trading View.

“Given that an Ethereum ETF will be listed in the coming weeks, it seems very likely that a rotation will occur and that this level of Bitcoin dominance will not continue.”

In a post on X on June 15, cryptocurrency trader “cyclop” He said That altcoins peaked exactly 546 days after the halving in the last two sessions before adding it,

“If the cycle repeats, this is your last chance to buy the dip before replacement prices go parabolic.”

In the past two sessions, altcoins peaked exactly 546 days after the halving.

If the cycle repeats, this is your last chance to buy the dip before replacement prices go parabolic.

But you need to buy the appropriate replacements so that it is not 2x, but 100x.

Here are my correct choices pic.twitter.com/iRawDq8XL5

– (@nobrainflip) June 15, 2024

The total market cap remained flat over the weekend at $2.54 trillion, according to CoinGecko. Bitcoin remains within its range-bound channel but most altcoins continue to decline.