Altcoins
Why are Altcoin prices falling and when will they recover?
Altcoin prices have noted volatile trading over the past few days, with Ethereum, Solana XRP and others noting declines. At the same time, the decline of the broader crypto market also followed a fall in the price of Bitcoin, sparking discussions about the potential reasons for the drop.
A host of macroeconomic factors and global trends could have weighed on recent sentiment recently. So here we look at the main reasons for the recent price drop.
Why are Altcoin prices falling?
Some of the main reasons behind the recent sell-off include:
Release of Bitcoin ETFs
After recording massive influxes in recent weeks, the US Spot Bitcoin ETF recorded an outflow of $200.4 million on Monday, June 11. This sudden trend reversal weighed on overall market sentiment, which could have contributed to the altcoin’s recent price drop.
The massive influx to Bitcoin ETF has so far boosted market optimism, triggering a rise in the price of Bitcoin in recent weeks. Additionally, altcoin prices also followed suit, registering significant gains, before seeing a decline compared to last week.
US Jobs Data Triggers Altcoin Decline
The last weeks US employment data The results were stronger than expected, dampening investors’ hopes for a possible accommodative stance from the US Federal Reserve. Notably, the Federal Reserve has maintained a hawkish stance so far this year with its policy rate plans, to combat searing inflation.
That said, the European Central Bank (ECB), which has also maintained a similar stance, announced a rate cut last week. Although expectations of a similar move by the US central bank also subsequently soared, labor market data dampened hopes as the market waited for more economic clarity.
Read also: June 2024 FED Meeting – Why Interest Rate Cuts Might Not Happen at All?
Inflation, FOMC and Fed Chairman Commentary Will Impact Altcoins Performance
After last week’s dismal economic data, investors are now eagerly awaiting today’s US CPI inflation data, FOMC Interest Rate Decisions, and the press conference of Fed Chairman Jerome Powell. THE United States Consumer Price Index (CPI)
the data will provide insights into the current level of inflation in the country, a crucial factor in deciding the future of altcoin prices. Additionally, the market will also closely watch tomorrow’s US PPI data, to get further clues on inflation.
On the other hand, the FOMC’s decision on interest rates will play a crucial role in shaping the market in the coming days. Although the market expects the Federal Reserve to maintain its key rate, any other decision could impact the market. At the same time, Fed Chairman Jerome Powell’s remark will provide insight into whether the central bank’s interest rate plans may move forward.
Given this, the market seems to be taking a pause before crucial events, which could cause a scenario of increased volatility in the market. altcoin prices.
When will Altcoin prices rebound?
The broader crypto market has also seen volatile trading this year ahead of previous FOMC events. However, soon after the event, the entire market saw a strong recovery, erasing the losses recorded before the event.
Considering this, market experts anticipate a recovery in the market. altcoin prices shortly after the event. But despite this anticipation, it is also worth noting that if the US CPI data is higher than expected, it could prolong the altcoin’s current price volatility. At the same time, the Fed’s comment, especially if the central bank takes a hawkish stance, will also impact overall market sentiment.
At the time of writing, Solana Price was down 1.32% and trading at $152.67, while XRP Price fell 0.54% from yesterday to $0.484. In the sector of the same corners, Dogecoin Price plunged 1.08% to $0.1405, with Shiba Inu Price down 0.71% to $0.00002207.
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