Currently, the cryptocurrency market is experiencing a decline with Bitcoin below $63,000 and Ethereum struggling to maintain its position above $3,200. Other major altcoins such as Solana, XRP, and Cardano also faced losses. This diversity in performance highlights the diverse nature of the crypto market, with different digital assets reacting differently to market conditions.
Is the altcoin in a sell or buy zone?
The Federal Reserve's impending interest rate decision, scheduled for May 1st, is a key factor influencing market sentiment. Analysts have a wide 95.6% expectation that the Fed will keep interest rates at current levels. Also under pressure are weaker-than-expected GDP figures that indicate a possible economic slowdown. Persistent inflation continues, as evidenced by rising core PCE numbers. This poses a challenge for the Fed in managing rising inflation.
The double whammy of slowing growth and soaring inflation paints a troubling picture, a classic sign of stagflation, when an economy faces stagnant growth as prices rise.
Current market outlook
Many experts argue that the US economy is in stagflation, posing a unique challenge for the Federal Reserve (FED). Traditionally, when the economy slows, the Fed lowers interest rates to encourage growth. Conversely, when inflation rises, interest rates rise to keep prices in check.
But policymakers find themselves in uncharted territory in the turbulent waters of stagflation, where both conditions collide. The initial forecast that there would be multiple rate cuts has been revised, and expectations are now leaning toward just one rate cut in 2024.
Bitcoin’s volatility remains stagnant, indicating a change in market sentiment. The price of Bitcoin has also declined from 70% to 50% and remains stable. This decrease in volatility suggests possible stabilization in prices, or a period of consolidation after recent fluctuations. Meanwhile, Ethereum's risk reversal points to concerns about possible delays in the SEC's approval of the Spot Ether ETF, contributing to downward price pressure.
Furthermore, Ethereum’s risk reversal indicates that dark clouds are gathering over SEC approval of the Spot Ether ETF. This uncertainty casts doubt on the market's trajectory and prompts investors to look for potential catalysts.
One such catalyst could be the launch of a Bitcoin and Ethereum spot ETF in Hong Kong, which is expected to draw Asian institutional investors into the crypto market. This event is highly anticipated as a major driver of market growth and could bring in new cash flows.
However, EGRAG CRYPTO points to a historical pattern of consolidation after a range retest breakout, suggesting a reconsideration of the bearish outlook for altcoins. They predict two major uptrends in the future, and advise holding on to the stock while taking dollar-cost averaging into account.
Also check out: Crypto traders predict upcoming altcoin season as Bitcoin eyes $74K breakout
