Examining the Causes Behind the Recent Altcoin Price Drop and Projected Recovery

According to CoinGape, various factors could have influenced the volatile trading in altcoin prices over the past few days. This section examines the potential causes and the timeline for recovery.

Altcoin prices, including those of Ethereum and Solana, have dropped significantly in recent days, sparking speculation on the factors behind the downturn and the potential timeline for recovery.

Multiple factors could have impacted the volatile trading in altcoin prices, CoinGape reports.

Ethereum, Solana, XRP, and other altcoins experienced a decline in value, as evident in their volatile trading. Meanwhile, the broader crypto market also saw a decrease in response to the Bitcoin price drop.

Several global trends and macroeconomic factors influenced the recent sentiment.

Here's a closer look at the primary causes of the recent price decrease.

Bitcoin ETF Outflow

The U.S. Spot Bitcoin ETF experienced an outflow of $200.4 million on June 11, following a period of substantial inflows over the prior few weeks.

The recent decline in altcoin prices may be attributed to the sudden reversal of trends, which impacted the broader market sentiment.

As altcoin prices soared in recent weeks amid the substantial inflow into Bitcoin ETFs, so did Bitcoin prices, contributing to the optimism in the market.

However, the trend shifted last week as the U.S. Spot Bitcoin ETF saw outflows, while altcoin prices also declined from the previous week's highs.

U.S. Job Data Triggers Altcoin Decline

The U.S. job data from last week exceeded expectations, dampening investors' hopes for a prospective dovish stance by the U.S. Federal Reserve.

The Federal Reserve has maintained a hawkish approach with its plans for interest rates so far this year, which is especially notable given their efforts to combat the persistent high inflation.

However, the European Central Bank (ECB), which has maintained a similar position, announced a rate cut last week.

Despite the rising expectations for a similar move by the U.S. central bank, the labor market data had a diminishing effect as the market awaits further clarity on the economic front.

Altcoins to be Impacted by Inflation, FOMC, and Fed Chair Comment

Investors are eagerly awaiting the U.S. CPI inflation data, FOMC interest rate decisions, and Fed Chair Jerome Powell's press conference in the wake of the dismal economic data last week.

The U.S. Consumer Price Index (CPI) data is a crucial factor in determining the fate of altcoin prices, as it will provide an indication of the current inflation level in the country.

Moreover, the U.S. PPI data, which will be released tomorrow, will be closely monitored by the market to gain further insight into inflation.

On the other hand, the FOMC's decision on interest rates will have a significant impact on the market's performance in the coming days.

The market anticipates that the Federal Reserve will maintain its policy rate; however, any deviation from this decision could affect the market.

At the same time, Fed Chair Jerome Powell's statement will offer a glimpse into the central bank's potential future actions regarding its plans for interest rates.

In light of this, the market is at a standstill, awaiting the critical events, which could lead to a more volatile scenario for altcoin prices.

When Will The Altcoins Prices Rebound?

The broader crypto market has experienced volatile trading ahead of the previous FOMC events and this year.

However, the market quickly recovered after the event, reversing the losses incurred prior to its occurrence.

Considering this, market analysts are predicting a swift rebound in altcoin prices following the event.

However, it is also important to note that despite the anticipation, if the U.S. CPI data comes in higher than expected, the ongoing volatility in altcoin prices could be prolonged.

At the same time, the Fed's commentary will influence the overall market sentiment, especially if the central bank adopts a hawkish tone.

Solana was trading at $152.67, down 1.32% from yesterday, XRP was trading at $0.484, down 0.54% from yesterday. Coming to meme coins, Dogecoin was trading at $0.1405 with a 1.08% decrease, whereas Shiba Inu witnessed a 0.71% decrease and was trading at $0.00002207.

News source：https://www.kdj.com/cryptocurrencies-news/articles/examining-altcoin-price-drop-projected-recovery.html

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