In a video released earlier today, crypto analyst Michaël van de Poppe, also known as “Crypto Michaël,” delved into the reasons behind the ongoing crash in altcoin prices and offered insights into the future of the cryptocurrency market.
Michaël started by acknowledging the significant downturn in the altcoin market, with some major altcoins dropping by over 40% in the past two weeks and on-chain altcoins plummeting by more than 70%. He highlighted the inherent volatility of altcoins, which can see rapid gains followed by severe corrections.
One of the primary reasons for the current crash, according to Michaël, is the uncertainty surrounding spot Ethereum ETFs in the U.S. Michaël pointed out that although these ETFs have been approved by the U.S. SEC, they are not yet listed, creating confusion and impacting market sentiment. He explained the two-part approval process involving the 19b-4 forms (which cover technical details and compliance with the SEC) and the S1 forms (which involve the actual exchanges listing the ETFs). The delay in listing has contributed to the downward pressure on the market.
Michaël noted that the approval of spot Ethereum ETFs would likely classify Ethereum as a commodity, similar to Bitcoin. He believes this classification could lead to increased institutional investment and broader acceptance of Ethereum and other cryptocurrencies.
Michaël then went on to discuss another significant factor influencing the market, i.e. the recent macroeconomic data, including the U.S. Consumer Price Index (CPI) and the U.S. Producer Price Index (PPI). Both indicators showed lower-than-expected inflation, which initially suggested a potential end to rate hikes by the Federal Reserve. However, the Fed’s more hawkish stance has led to continued uncertainty. Michaël emphasized that altcoins perform best in environments of low interest rates and high liquidity, conditions that are currently not met.
The strength of the US dollar and its impact on the cryptocurrency market was also discussed. A strong dollar typically leads to weaker performance in risk-on assets like cryptocurrencies. Michaël added that recent decisions by the European Central Bank (ECB) to cut rates have further strengthened the dollar, adding to the pressure on the crypto market.
Despite the current downturn, Michaël remains optimistic about the potential for a market reversal. He believes that the listing in the U.S. of spot Ethereum ETFs, expected within the next few months, could act as a significant catalyst for a bullish trend. He mentioned that gistorical patterns, such as the price action following the approval of the Bitcoin ETF, suggest that initial corrections could be followed by substantial gains.
Michaël also highlighted the importance of Bitcoin dominance and its impact on altcoins. As Bitcoin dominance remains high, altcoins are underperforming. However, he anticipates that a reversal in Bitcoin dominance could signal the start of a new altcoin rally.
In his technical analysis, Michaël pointed to several critical support levels for Ethereum against Bitcoin and emphasized the importance of these levels holding to trigger a potential reversal. He also discussed the significance of macroeconomic indicators like the strength of the dollar and yields on US treasury bonds, which influence market movements.
Featured Image via Pixabay
