The cryptocurrency market is facing one of the longest and toughest periods for altcoins. Many investors who held out through this phase have suffered huge losses, and prices are struggling to recover despite strong macro signals. Analyst Michael van de Poppe believes this period of exhaustion may be coming to an end.
He said the recent correction after the Federal Reserve’s recent meeting has shaken market confidence, but the underlying data shows change is coming. The Federal Reserve has decided to cut interest rates by 25 basis points and plans to end quantitative tightening by December 1st. This step could mean the tightening phase of the cycle is almost over. This is a situation that has historically marked the beginning of a new bull market.
The end of tightening may be a turning point
In previous cycles, similar monetary policy changes caused a massive collapse in cryptocurrencies. Bitcoin and altcoins entered a strong bullish phase in 2020 as the Fed began lowering interest rates and initiating quantitative easing. Meanwhile, the tightening and rate hikes that began at the end of 2021 were the beginning of what bear market investors are still feeling.
Once again, the conditions indicate a transition. Inflation is no longer the Fed’s main concern. Employment and economic growth will be prioritized. Weak labor and business data could force the Fed to cut rates further. This would increase liquidity and create a favorable environment for risk assets, including cryptocurrencies.
Gold peaks, risk assets are preparing to move
Van de Poppe said gold, which is often a sign of risk-off sentiment, recently peaked and fell by nearly 10%. Historically, when the gold market cools after a strong rally, money begins to move back into risk-on assets like stocks and cryptocurrencies.
Although Bitcoin remains within a narrow range around the $109,000 level, its valuation compared to assets such as gold and copper suggests that Bitcoin is undervalued. Van de Poppe predicts that this lag will subside as liquidity changes and Bitcoin could head toward $150,000 to $170,000 in the coming quarters.
As Bitcoin regains momentum, altcoins are likely to follow suit. Many smaller cryptocurrencies are already showing signs of bullish divergence, a pattern that often signals the beginning of a recovery.
Setting up for the next alt season
Although the market reaction to the Fed meeting was negative in the short term, the long-term picture looks increasingly favorable. The end of quantitative tightening, the possibility of interest rate cuts, and the cooling of the gold market all signal a return to risk-taking.
This combination may indicate the early stages of a new cycle. After months of severe correction, altcoins may finally see some relief if Bitcoin breaks through a key resistance level around $112,000.
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