Brief

Ethereum, XRP, and Solana all saw declines on the same day, with the drops being even more significant compared to Bitcoin. Analysts attribute this to macroeconomic pressures driving down prices.

In the past 24 hours, altcoins have been under overall pressure, with major tokens experiencing a "more significant pullback" compared to Bitcoin. As the total market value of all cryptocurrencies fell by 2.5% to $2.8 trillion, Ethereum declined by 5.5% in the same period, with its market value dropping to $289 billion; XRP fell by 5.1%, with a market value of $82.4 billion; Solana fell by 3.8%, with a market value of $60.6 billion. Meanwhile, industry leader Bitcoin fell by 3.1% on the day and 2.6% for the week, with a market value of $1.6 trillion.

Previously, on Wednesday, Decrypt reported that the U.S. consumer price index rose 3.7% year-on-year in September, while forecasters from Myriad believed that the probability of a rate hike in October was 28%. (Disclaimer: Myriad is a forecasting market operated by Decrypt, which is a subsidiary of Dastan.)

"This rapid withdrawal from long-term bullish bets, coupled with aggressive short-term hedging, indicates a dramatic shift in market mechanisms," he said. "Institutional participants are quickly re-evaluating their macro risk exposures, as the interest rate trajectory has once again become uncertain."

"It seems that high-beta assets have been more severely impacted, which is similar to what happened in the stock market, where those stocks that had performed well recently have experienced greater pullbacks," Nolan told Decrypt. "Altcoins are usually more sensitive to financial conditions, and tightening policies can affect the premise of liquidity expansion."

Nolan also pointed out that the rise in the US dollar index to near 18-month highs is putting downward pressure on the entire crypto market. He stated that in the medium term, crypto assets tend to be inversely correlated with the dollar index ( DXY ). This is partly because crypto assets are denominated in dollars, and partly because a stronger dollar tightens liquidity and weakens risk appetite.

Bitwise Europe Senior Vice President Max Shannon told Decrypt, that this round of decline also reflects a natural correction following the "strength and momentum" of the altcoins in the previous months.

According to Shannon, since the beginning of October, the number of open contracts for altcoin futures that do not include Ethereum has decreased by $8 billion. He believes that this indicates that traders have "locked in their profits," which is a natural reaction following a strong upward trend.

He added that Ethereum also exhibited a similar pattern. Ethereum outperformed Bitcoin for three consecutive months, which is the first time such a situation has occurred since March 2021, and investors have since been taking profits. He stated that Ethereum experienced net outflows for 11 consecutive trading days, totaling $782.8 million, before briefly turning to net inflows on Tuesday. However, according to data, funds flowed out again thereafter, with a net outflow of $129.5 million.

“This round of price movement is more like a consolidation period for the altcoins after their previous good performance,” Shannon told Decrypt. “During tough times, altcoins are usually highly correlated with Bitcoin; however, in a better market environment, especially when they have their own independent catalysts, their correlation becomes lower. Therefore, in the short term, these altcoins are likely to continue to fluctuate in sync with Bitcoin, albeit more sensitively.”

Regarding the price rebound, Nolan stated that he hopes to see a decline in market expectations for a rate hike in October. Currently, it is difficult for him to determine whether altcoins have hit bottom, as he believes there are reasonable reasons for prices to move in either direction.

“I can imagine a scenario where if Bitcoin loses its support level, altcoins might continue to fall,” Nolan told Decrypt. “Conversely, that could also be the case: this might just be a short-term pullback, and we could soon return to a favorable market environment; if Bitcoin is able to stabilize above $80,000 again, I can definitely see altcoins experiencing even more significant gains.”