What’s next for Ethereum and other cryptocurrencies?

What factors are driving the downtrend in altcoins and when can we expect a turnaround?

Last month, the crypto market, especially altcoinsfaced a prolonged recession, with many recording staggering losses.

Ethereum (ETH), the second largest crypto by market valueIt has lost nearly 10% of its value over the past 30 days, trading at around $2,960 on May 13.

However, ordinals (ORDI) was hit the hardest, dropping 40% and now trading at just $36.80.

This market downturn aligns with global economic trends such as recent decision by the Federal Reserve (Fed) to maintain its interest rates between 5.25% and 5.50%.

The Fed’s cautious approach to monetary policy, aimed at tackling inflation and economic growth, may have created uncertainty among crypto investors, leading them to favor more established assets like Bitcoin (Bitcoin).

BTC has largely traded above $60,000 levels during this recession, with BTC domain even peaking at almost 57% in April, a huge increase from last year’s levels of 45-46%. On May 13, BTC dominance was over 55%.

BTC Dominance Chart | Source: TradingView

Additionally, the Fed’s announcement about its strategy of reducing bond holdings, slowing the pace that allows yields from maturing bonds to be eliminated without reinvestment, could indicate potential future economic challenges.

This signal may have further reduced investor confidence in altcoins, diverting attention and capital away from riskier assets.

As the crypto market faces this recession, the question arises: when will altcoins recover? Let’s explore.

What do the experts think?

Analysts have offered a variety of perspectives on the current state of the altcoin market. Here’s what they think

Patric H. | CryptointelligenceX

Patric H. remains bullish on the overall market, anticipating a continuation of the bull market until mid-Q3/Q4 2024.

However, he warns of a turbulent phase in the short term, especially in May. He predicts a final move in the next 2 to 6 weeks, possibly revisiting $52K for Bitcoin and $2 trillion for total market cap.

He attributes the delay in bottoming out to the lack of sufficient pain in the market, indicating that sentiment remains too euphoric.

Patric advises monitoring the Fear and Greed Index for signs of a shift toward “fear.” He also mentions keeping a tab on divergence in sentiment and trading volumes, which could suggest a possible reversal.

Benjamin Cowen

Benjamin Cowen draws parallels to the previous cycle, noting that ALT/BTC pairs tend to capitulate just before rate cuts. He suggests that ALT/BTC pairs could fall another 40% from current levels in the coming months.

Cowen attributes altcoins’ continued struggles to a decline in social interest, comparing the current market movement to that of 2019.

He points out that social interest rates have declined before rate cuts in the past, suggesting a potential bottom for ALT/BTC pairs, coinciding with a change in Fed policy.

Michael van de Poppe

Michaël van de Poppe notes that altcoins are experiencing a regular correction in dollar valuations, but in BTC valuations, they have fallen sharply, approaching cycle lows.

He suggests that this undervaluation represents an opportunity to attack riskier markets rather than move away from crypto.

What to do with this?

These analyzes suggest a cautious outlook for the altcoin market in the near term, indicating that more corrections may be on the horizon.

However, they also point to a possible upward trend in the medium and long term. This means you must remain alert and flexible as the market evolves.

The next few weeks will be important for the altcoin market, with factors such as sentiment, trading volumes and external economic events likely to have a major impact.

Potential catalysts for market recovery

The crypto market is at a critical juncture, with potential catalysts that could restore normalcy and revive bullish sentiment.

A major development is the progress of the Financial Innovation and Technology for the 21st Century (FIT21) Act in the U.S. House, which aim to bring regulatory clarity to digital assets.

If passed (could be in May), the bill could establish federal standards for digital assets, clarify the jurisdiction of regulatory bodies such as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), and establish a regulatory framework . for digital asset markets.

The crypto industry has long sought regulatory clarity, and the FIT21 Act could offer much-needed certainty to market participants and investors, potentially increasing confidence and investment in the sector.

Furthermore, the bill’s provisions to allow secondary market trading of digital commodities and impose requirements on registered entities could improve transparency and market integrity.

Another potential market driver is the SEC’s upcoming ruling on VanEck’s spot ETH exchange-traded fund (ETF). applicationscheduled for May 23, 2024. A favorable decision could trigger a rally in ETH prices, similar to the ETF-driven surge in Bitcoin in early 2024.

Concerns persist regarding the SEC’s classification of ETH as a commodity or security, which could impact the approval of spot ETH ETFs.

Current sentiment surrounding the launch of spot ETH ETFs in the US is largely bearish, with concerns about regulatory uncertainty and the position of the SEC under Chairman Gary Gensler.

However, industry experts believe that a spot ETH ETF will eventually get the green light, mirroring the path of spot BTC ETFs, which initially faced rejections before prevailing in a lawsuit against the SEC.

In the short term, a rejection of the spot ETH ETF could trigger greater price volatility and a decline in ETH prices as the market absorbs the news.

Meanwhile, regulatory clarity and approval of spot ETH ETFs could drive altcoin market recovery and uptrends in the coming months.

ETH Price Analysis

On May 13, Ethereum was trading for around $2,970. ETH has been following a descending pattern, leading to concerns that it could fall below the $2,500 mark.

The recent trend in ETH prices has been bearish, with weekly trading opening below the previous week’s close, suggesting a lack of upside momentum.

ETH Price Analysis | Source: TradingView

Over the past 24 hours, the ETH/USD pair has been trading positively, breaking above $2,900 levels but facing solid resistance around the EMA50 at $2,990. For a downtrend to resume, ETH needs to break below $2,900, potentially heading towards the $2,800 and $2,620 levels.

On the other hand, a continuation of the rise and a break of $2,990 could lead to further gains towards $3,130 levels.

The expected trading range for ETH is between $2,800 (support) and $3,050 (resistance), with the forecast trend remaining bearish.

ETH analysis suggests that prices may face continued downward pressure, also impacting other altcoins in the market.

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