Experts predict that the Altcoin Rally is delayed: Reasons outlined.
Crypto enthusiasts are starting to question if the long-awaited "altcoin rush" in the digital currency market is just around the corner.
The main reasons for this uncertainty include the U.S. Federal Reserve (Fed) not yet indicating any plans for a rate cut, global economic jitters, and a noticeable lack of substantial liquidity inflows in the market.
The Ethereum ETF Didn't Quite Nail It
As stated by Matrixport's analysis, even the approval of an Ethereum spot ETF in the U.S. didn't have the expected lasting impact on the altcoin market. For instance, Ethereum's market dominance took a hit, dipping around 50% following the ETF launch. The recent trend of meme coins, AI tokens, and Layer-2 projects appears to mostly follow the traditional "hype-then-dump" cycle.
Did You Know: Fed's Decision Could Pose Threats to Bitcoin and Altcoins
What it Takes to Resuscitate the Market
Matrixport outlines three key developments necessary for the altcoin market to regain its footing:
- The Fed taking "dovish" steps such as rate cuts,
- Increased growth in the stablecoin supply, which signals a rise in market liquidity,
- Macroeconomic stimuli like expanded credit or government support programs.
Currently, these conditions seem precarious, with doubts surrounding the rate cuts and a slowdown in the growth of macroeconomic stimuli.
Progress on Stablecoins, But There's Still More Needed
On the stablecoin front, things are looking up. Tether (USDT) and USD Coin (USDC) have shown impressive growth over the past eight months. USDT's market value soared from $113 billion in August to $143 billion by April. USDC, on the other hand, increased from approximately $31 billion to an impressive $60 billion, marking a 93% growth. This indicates a steady increase in crypto liquidity.
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- Despite the Ethereum ETF's approval not having the expected lasting impact on the altcoin market, Matrixport suggests that a resurgence might occur if the Fed takes 'dovish' steps like rate cuts, there's an increase in stablecoin supply indicating rising market liquidity, and the implementation of macroeconomic stimuli.
- The current market conditions seem uncertain, with questions surrounding rate cuts and the slowdown in the growth of macroeconomic stimuli.
- On the stablecoin front, there's been impressive growth for Tether (USDT) and USD Coin (USDC), potentially signaling a steady increase in crypto liquidity.
- Bitcoin's dominance in the market has been decreasing, with altcoins gaining ground, indicating a possible early capital influx into altcoins, although the market's sustainability remains debatable.
