Following the US Federal Reserve meeting on Wednesday, Bitcoin and the broader cryptocurrency market faced significant selling pressure. Fed Chairman Jerome Powell announced that interest rates would remain unchanged at 5.25%, hinting at a possible rate cut in September. This announcement triggered a market sell-off, leading to massive liquidations. Leading altcoins like Solana and XRP saw corrections of 7-8%.
Despite this setback, crypto whales are strategically accumulating, especially in the altcoin market. According to Ki Young Ju, CEO of CryptoQuant, the 1-Year Cumulative Buy/Sell Quote Volume Difference for Altcoins has shown a significant increase in limit order buy volumes. Ju notes that these limit order buys are rising because whales prefer them to avoid slippage. This trend indicates that large investors and institutions are building a strong buy wall in anticipation of future altcoin price surges.
Ju highlighted certain altcoins that stand to benefit from this increased interest, including Solana, Polygon, Cardano, Cosmos, PancakeSwap, My Neighbor Alice, Ampera, Ankr Protocol, and Chilliz. In contrast, tokens like XRP, Chainlink, Binance Coin, Compound Finance, Bancor Network, and Aave are currently seeing fewer buy orders.
Insights from Industry Analysts
Supporting this view, crypto analyst Jamie Coutts points to the Top 200 Equal Weight Index as a fundamental market indicator, signaling potential altcoin rallies. This index tracks the price performance of the top 200 altcoins compared to Bitcoin, with current readings suggesting a broader altcoin outperformance is imminent.
Popular crypto trader Mags also noted that the altcoin market is in a re-accumulation phase, with altcoins up only 58% on average since exiting a prolonged accumulation phase. This indicates that digital assets are experiencing minor pullbacks before potentially seeing further gains.
Anticipating Fed Rate Cuts
Looking ahead, the anticipated Fed rate cut in September is expected to inject strong liquidity into the market, potentially sparking a significant altcoin rally.
Spence Hakimian, founder of Tolou Capital, emphasized that lower interest rates and higher fiscal deficits are bullish for crypto. Given that altcoins generally have higher betas than Bitcoin, they are expected to outperform in a risk-on environment.
With the Federal Reserve eyeing a potential rate cut and crypto whales strategically positioning themselves, the stage is set for the next major surge in the crypto market.
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