Altcoins are getting hammered at the moment, with many of them falling to bear market lows, and there are a couple of reasons behind this drop.
While bitcoin remains in consolidation, around 10% away from its all-time high, the altcoins are crashing and wiping out most of the gains made in the March crypto market rally.
Calls for altseason have diminished, and the overall crypto market and social sentiment are low.
There are a few factors that contribute to this altcoin bearishness, as highlighted by market analyst and MN Trading founder Michaël van de Poppe on June 15.
Reasons Why Altcoins Are Down
Ethereum usually leads altcoin markets, and it has fallen 10% since the end of May. There is currently a lot of uncertainty around the Ethereum exchange-traded funds since they have been approved but have not been listed for trading yet.
If spot ETH ETFs are launched soon – Bloomberg analysts have eyed July 2 – this could provide a big boost for altcoins since ETH will be considered a commodity instead of a security.
“There are a lot more things going to be happening in the Ethereum ecosystem,” said the analyst, adding that almost all cryptocurrencies could be considered commodities.
Another factor weighing on altcoin markets is U.S. economic data and persistently high inflation, preventing the Federal Reserve from reducing rates.
“Altcoins flourish the best during periods of quantitative easing and low interest rates,” when liquidity in the global economy increases, he said.
This has been seen during previous cycles as altcoins do well when money is cheap to borrow and rates are low.
BTC Dominance High
The drop is not going to continue, he added, highlighting that Bitcoin dominance is also a big factor. BTC dominance is currently high at 55.4% and has been increasing since December, according to Tradingview.
“Given that the Ethereum ETF is going to be listed in the upcoming weeks, it seems very likely that the rotation will happen and that this level of Bitcoin dominance won’t stay.”
In a post on X on June 15, crypto trader ‘cyclop’ said that altcoins peaked exactly 546 days post-halving in the past two cycles before adding,
“If the cycle repeats, now is your last chance to buy the dip before alts will go parabolic.”
Total market cap has remained flat over the weekend at $2.54 trillion, according to CoinGecko. Bitcoin remains within its range-bound channel but most of the altcoins continue to decline.