Key Highlights:
- Bitrebounded above $107,000 after a volatile weekend triggered by Middle East tensions.
- Ethereumperformed relatively poorly, whileBit's market dominanceremained high at around66%.
- Due to funds not rotating into smaller alternative tokens, the Altcoin season remains distant.
- Trump's criticism of Fed Chair Powell put pressure on the dollar, boosting cryptocurrencies.
- Analysts are focusing on interest rate cuts and macro liquidity as potential future catalysts.
Crypto Market Stabilizes After Middle East Tensions; Bit Outperforms Ethereum
Due to escalating geopolitical tensions between Iran and Israel, the crypto market faced severe volatility over the weekend, with Bit dropping to $98,000. However, by mid-week, Bit had recovered key support levels, currently trading above $107,000, highlighting its resilience amid global uncertainty.
Ethereum followed a similar trend but with deeper declines and weaker rebound momentum.
According to Binance Research, Bit declined 8.5% from last Saturday to Monday before strongly rebounding; Ethereum dropped 17% and partially recovered. Despite market volatility, Bit's market dominance remained solid, closing the week at around 66%.
Binance Research cited a BlackRock study indicating Bit historically performs strongly after geopolitical events, averaging a 37% increase in the 60 days following such incidents. Whether this trend continues depends on macroeconomic conditions like inflation, liquidity, and investor sentiment.
Altcoin Season Delayed, Token Supply Dilutes Market Rotation
Despite Bit's recovery and overall market rebound, Altcoins have not yet experienced a decisive breakthrough. Analysts point out a key structural change: previously, Bit's wealth would typically overflow into Altcoins, but the current cycle is diluted by the influx of numerous new tokens and lack of new narratives.
dune analytics data shows Altcoin numbers have surged nearly tenfold across eight major blockchains in the past three years. This oversupply might impede fund rotation and weaken the "rising tide lifts all boats" effect common in previous bull markets.
Binance Research notes that unlike previous cycles driven by Initial Coin Offerings (ICO) or DeFi innovations, the current market lacks a dominant theme. Meme coins, BitcoinFi, and DePIN concepts are largely extensions of earlier trends. While AI has garnered widespread attention, its actual impact on cryptocurrencies remains limited.
Trump-Fed Tension Shakes Dollar, Supports Crypto Rebound
After US President Trump publicly criticized Fed Chair Jerome Powell for not cutting rates, the Dollar Index (DXY) dropped to a three-year low. Trump hinted at potentially replacing Powell before his term ends and is reportedly considering multiple successors.
Disagreements exist within the Fed. Powell maintained a cautious tone in congressional hearings, while Trump-appointed board members Michelle Bowman and Christopher Waller suggested potential rate cuts as early as July. These mixed signals created uncertainty in traditional markets but provided support for cryptocurrencies and risk assets.
As of Friday, the U.S. 10-year Treasury yield has dropped to 4.27%, while the VIX volatility index, known as the "panic index," fell 20% to 16.8, reaching a new low since February. These changes have collectively boosted market sentiment in both stocks and cryptocurrency markets.
Bitcoin Consolidates Macro Hedging Position, but Liquidity Focus Shifts to Altcoins
With Bitcoin's dominance remaining strong and stock markets near historical highs, the cryptocurrency market appears to be stabilizing. However, investors are still closely watching potential breakthrough opportunities for altcoins. Analysts believe that the altcoin season may continue to be delayed without a strong narrative or unique catalyst.
Looking ahead, all eyes are on the upcoming macroeconomic data, including inflation figures and central bank movements. If monetary conditions further loosen or ETF funds continue to flow in, Bitcoin may continue to lead the market — but the broader alternative token market still needs a spark to ignite.
