July 24, 2024
Altcoins News

Altcoin Market Crashes Amid Bitcoin Dominance

Understanding the Recent Market Decline

When Bitcoin’s value drops, altcoins often follow suit. Bitcoin’s current market cap stands at $1.33 trillion, representing 55.62% of the total market value. This rise in Bitcoin’s dominance is attracting investors back to Bitcoin (BTC) as a safe haven, causing altcoin market to crash amid volatile conditions.

Over the past week, the altcoin market has faced a notable correction, with its market cap decreasing by 2.4% to $254.943 billion. This decline is attributed to overall market weakness and uncertainty about the launch of the Ethereum ETF.

Altcoin Market Crash: Impact of Upcoming Economic Indicators

The primary factor driving the current market correction is the impending release of the Consumer Price Index (CPI) and the Federal Open Market Committee (FOMC) meeting on Wednesday. Historically, crypto markets have tended to decline before such events. Previous statements from FED Chair Jerome Powell have often resulted in significant market corrections.

For instance, the last two FOMC meetings led to Bitcoin dropping by over 10% in the week preceding the events. Altcoins experienced even steeper declines, sometimes exceeding 20%. This pattern indicates that investors are cautious ahead of potential regulatory or economic changes.

The ‘Roaring Kitty’ Effect and Broader Market Impact

A significant event affecting the market was the ‘Roaring Kitty’ saga, which drove altcoin prices down. The correction in GameStop last Friday triggered a wider market correction, with some altcoins falling by more than 20%. Additionally, the strength of the U.S. Dollar and ongoing quantitative tightening (QT) have further diminished the growth prospects for altcoins, resulting in a continued downward trend.

Future Market Trends to Watch

Despite the current pessimism, there are signs of a potential rebound. Historically, markets have recovered quickly after FOMC meetings. Ethereum has posted gains of around 20% following these meetings, and Bitcoin has risen by more than 20% since the last FED meeting.

Investors are closely monitoring the situation as the growing U.S. government debt and weaker economic data suggest a possible interest rate reduction. Senator Elizabeth Warren and her colleagues have urged Fed Chair Jerome Powell to cut rates to ease financial burdens on Americans facing high housing and insurance costs.

The rising unemployment rate and recent rate cuts by the European Central Bank (ECB) indicate that the FED might eventually lower rates to prevent a potential recession. Additionally, the expected approval of the Ethereum ETF in the coming weeks could boost the altcoin market, potentially reversing the current downward trend. Investors are optimistic that these developments will provide a much-needed lift to the crypto market.

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Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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