Bitcoin on the decline: Altcoins also affected - What's next!

Bitcoin on the decline: Altcoins also affected - What's next!

The cryptocurrency market is currently experiencing a noticeable decline, which is influenced by several factors. Bitcoin fell below $109,000 on Friday and temporarily reached $108,617, its lowest level since early July. Within 24 hours, the leading cryptocurrency suffered a decline of almost 4 percent, putting it around 12 percent below its all-time high of $124,128. This development is worrying as Bitcoin is recording a loss of around 8 percent in a 30-day comparison.

The falling prices also affect other major cryptocurrencies. Ethereum slipped to around $4,295, down 6 percent in 24 hours, and is around 13 percent below its record high of $4,946. Ripple (XRP) fell 6 percent to $2.84, while Solana saw a 3 percent decline to $209. Data from the futures market shows that long positions worth $446 million were liquidated, with a total of $535 million in liquidated positions. This market trend is alarming and is attributed to recently released US economic data, particularly the Personal Consumption Expenditure Price Index, which showed core inflation of 2.9 percent in July.

Market situation and historical trends

The situation is exacerbated by general market developments. The S&P 500 lost 0.6 percent, while the Nasdaq fell almost one percent. Additionally, September is historically considered a weak month for both stocks and cryptocurrencies, prompting analysts to warn of a possible continuation of the bearish trend. Analyst Benjamin Cowen predicts a correction for Bitcoin, Ethereum and altcoins in September, emphasizing that historical post-halving patterns show sharp declines following summer rallies.

Cowen draws parallels to 2013, 2017 and 2021, when Bitcoin corrected sharply following similar market moves. Currently, Bitcoin is at its peak this cycle near $124,000, reflecting the rise in 2020 when a previous high was set at $12,400. Cowen highlights that Bitcoin has been “virtually stable” since early July and is currently at the bull market support range of $110,000-115,000.

Outlook for Ethereum and Altcoins

For Ethereum, Cowen expects a short rise to new all-time highs, followed by a decline of 20 to 30 percent. Altcoins could see even deeper declines of between 30 and 50 percent as liquidity could flow back into Bitcoin's dominance. Additionally, Cowen points to macroeconomic risks, including the possible Federal Reserve interest rate cut in September, which could trigger higher bond yields.

The latest PPI data also shows inflation is “stronger than expected”, adding further pressure on markets. In summary, Cowen predicts a decline of around 6 percent for Bitcoin, 20 to 30 percent for Ethereum after the peak and 30 to 50 percent for altcoins, leading to a consistently uncertain market development.

Myriad Markets users estimate the likelihood of Ethereum hitting a new record high of $5,000 by the end of the year at 75 percent, representing at least a positive outlook amid the current challenges.

ICOBench reports, that the current market situation is causing concern, while Yahoo Finance explains, that historical trends point to a possible strong correction.