Cryptographic markets recently faced renewed challenges, despite a brief resurgence following the reduction in the American Federal Reserve (Fed) which initially propelled Bitcoin (BTC) to the $ 120,000 mark.
This week, however, Bitcoin fell at the lower end of its established consolidation range, fluctuating between $ 110,000 and $ 115,000. Taurus theory analysts have identified several factors contributing to this slowdown.
How Fed and QT policies have an impact on crypto
One of main reasons For the current situation, the capital flow is favorable to traditional assets. In the wake of rate drops, institutional investors tend to channel their stocks in equity and gold, because these are considered as high liquidity assets with a proven assessment.
On the other hand, cryptocurrencies, especially altcoins, often find themselves at the end of the liquidity pipeline. They generally only see the increase in prices when the risk appetites considerably widens among investors.
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In addition, liquidity remains tight in cryptographic space, despite the recent actions of the Fed. While the central bank reduced rates in September, other variables restrict the flow of capital in cryptocurrencies.
Quantitative tightening (QT) is still being implemented, the Fed actively reducing its assessment. In addition, the US Treasury absorbs liquidity thanks to the reconstruction of the General Treasury Account (TGA), and the money market funds currently hold more than 7.7 billions of dollars in cash which remain largely inactive.
This lack of liquidity means that any overflowing effect on the cryptography market will be limited, resulting in a slower rotation of capital in digital assets.
Cyclical trends suggest a potential rebound
The macroeconomic patterns observed in September 2024 also re -emerge. Last year, after a drop in rate, Bitcoin exceeded $ 60,000, while Ethereum (ETH) and other altcoins appreciated significant gains. However, this was followed by a sharp decline, Bitcoin lowering 11% and Ethereum knowing an even more abrupt fall.
In the same vein, in September, Bitcoin oscillates around $ 112,000 after briefly touched $ 118,000, while Ethereum increased from $ 4,600 to $ 4.1.00.
This cyclic model suggests that crypto can be started for a rebound, but only after a period of consolidation and confirmation. In addition, the imminent expiration of options for Bitcoin and Ethereum adds another layer of volatility at the market.
Movement of stables and institutional entries
Another factor with an impact on the market is the supply and speed of stablecoins. While the total offer of stable went from $ 204 billion in January to $ 308 billion in September – a level of all time – the speed of these assets does not follow the pace.
Analysts have identified that a large part of this capital remains inactive, either inactive, sanded or used off-exchange. Until the speed of stables increases, the impact of prices on cryptocurrencies will remain likely to remain moderate.
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For the future, historical trends suggest that although crypto can be short in the short term, they often follow traditional assets with important gains once the market stabilizes.
The day after the heights of all time stock marketsBitcoin previously reached an average increase of 12% within 30 days and a remarkable 35% over 90 days. In particular, after the summits of all Nasdaq time, Bitcoin increased by an impressive 46% within 90 days.
In order for cryptographic markets to resume their momentum, the active movement of the floors is essential, as well as cooling of the trade in derivatives and substantial purchases from institutional investors and funds negotiated on the stock market (ETF).
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