Altcoins Market Is Crashing – Here’s Why & What To Expect Now?
The post Altcoins Market Is Crashing – Here’s Why & What To Expect Now? appeared first on Coinpedia Fintech News
When Bitcoin prices tend to drop, other altcoins often decrease in value too. Currently, Bitcoin’s market cap stands at $1.33 trillion, making up 55.62% of the total market value. This rise in Bitcoin dominance is drawing investors back to Bitcoin as a safe haven amid volatile market conditions, causing altcoins to crash.
In the past week, the altcoin market has been correcting substantially, dropping 2.4% in its market cap to $254.943 billion. This decline is due to overall market weakness and uncertainty surrounding the launch of Ethereum ETF, leaving many in the crypto sphere wondering why altcoins are crashing significantly.
Factors Leading To Altcoin Crash
The primary driver behind the current market correction is the upcoming Consumer Price Index (CPI) release and the FOMC meeting scheduled for Wednesday. Historically, the crypto markets have seen downward momentum in expectation of such events.
For instance, past statements from FED Chair Jerome Powell have often led to notable corrections in the crypto markets. The previous two FOMC meetings led to Bitcoin dropping by more than 10% the week before the events, with altcoins falling even more than 20% like in March.
Roaring Kitty Saga Impact
A key event impacting the market was the ‘Roaring Kitty’ saga, which pushed down altcoin prices. The correction in GameStop from last Friday led to a broader market correction, with some altcoins dropping by more than 20%.
Additionally, the strength of the U.S. Dollar and ongoing quantitative tightening (QT) further weaken the case for altcoin growth, leading to a continued downward trend.
Despite the current negative sentiment, there are signs of a possible rebound. Historically, markets have bounced back quickly after FOMC meetings. Ethereum has seen gains of around 20% after these meetings, and Bitcoin has risen by more than 20% since the last FED meeting.
What To Expect Next?
Investors are closely watching the situation as the growing U.S. government debt and weaker economic data hint at a possible interest rate drop. Senator Elizabeth Warren and her colleagues have written a letter to Fed Chair Jerome Powell, urging a rate cut to ease financial burdens on working Americans facing high housing and insurance costs.
The unemployment rate is rising, and the European Central Bank (ECB) has already started cutting rates. These factors suggest that the FED might eventually lower rates to prevent a potential recession.
Furthermore, the approval of the Ethereum ETF is expected in the coming weeks, which could positively impact the altcoin market too.
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