Analysts at crypto services firm Matrixport think altcoins will be hard-pressed to enjoy much of a rally in the immediate future. A combination of factors paints this grim picture. Major contributing factors are the U.S. Federal Reserve’s monetary policy, macroeconomic uncertainty, and an absence of robust liquidity motivators. The approval of the U.S. Ethereum spot ETF wasn’t enough to bring back long-term bullish momentum towards the altcoin market.
We think that the U.S. Federal Reserve’s overly dovish stance on monetary policy is very much to blame when it comes to limiting altcoin growth. In recent months, the Federal Reserve has taken a similar wait-and-see approach. It further signals that it feels confident enough to keep rates relatively stable as it continues to assess the economic impact of recent policies, including Trump’s tariffs. A dovish pivot by the U.S. Federal Reserve is enough to trigger a new altcoin bull run. Of course, interest rate cuts would likely be one of the major catalysts for such a revival.
Macroeconomic uncertainty adds another layer of complication to the landscape for altcoins. The combined market caps of Tether (USDT) and USD Coin (USDC) have doubled over the last eight months alone. Nationally, this growth continues in the face of a still-volatile market. This hyper growth is indicative of liquidity continuing to flood into crypto. Continued growth in stablecoin issuance. This is the final and perhaps most important catalyst that’s needed to reignite the altcoin market.
Insufficient liquidity drivers are a big part of creating these adverse conditions for altcoins. Ethereum’s (ETH) dominance has tanked almost 50% since the launch of the U.S. Ethereum spot ETF. The altcoin market has largely played out in a similar “pump and dump” fashion as of late, unable to keep the positive upward movement going. Additional credit and macro stimulus programs from the government are the two most important macro liquidity drivers. These three factors are instrumental in bringing the altcoin market back to life.
