ETH from Exchange is being withdrawn, which means little capital to flow to other Altcoins.
The rate cut in the US could drive the Altcoins, but it is not doing it yet.
The cryptocurrency market is giving clear signs: the Altseason is on the tightrope.
Proof of this is that The Altseason index fell from 100 to 65 pointsas seen in the following graphic provided by the Blockchain Center organization:
The market enters Altseason when at least 75% of the 50 main cryptocurrencies Achieve a better performance than Bitcoin (BTC) in the last 90 days, as explained in cryptopedia, educational section of cryptootics.
But what is happening? For Cryptoquant analysts, an analysis firm ON-CHAINthis happens because There are indications that the capital rotation of BTC to Ether (ETH), the native cryptocurrency of Ethereum, is coming to an end.
The Altseason generally begins to form when money flows from BTC to ETH, and then to other projects of great market capitalization.
If there are exchanges ETH exit indications, it is a sign that investors have already moved much of their funds. Without new capitals entering the Altcoins, The buying pressure is stopped and, therefore, the euphoria in the markets.
On this point, analysts highlight that since June they began to register indications that there are withdrawals of ETH (blue painted area) and pointed out that the rotation of the Altcoins has lasted more than expected (green zone), as seen in the following graph:
This means that investors are moving their holdings in the ETH of the exchanges, reducing the liquidity available for rapid operations. The extension of the rotation to Altcoins suggests that, although there has been an initial capital flow to these assets, the impulse for a sustained Altseason has not yet been consolidated.
In addition, another issue to keep in mind is that BTC dominance has grown significantly in recent days. It is a sign that the currency created by Satoshi Nakamoto is capturing most of the market capital, compared to the rest of the cryptocurrencies.
Juan Villaverde, financial market analyst, warns that “fireworks should not be expected in the immediate future.”
According to his thesis, there is a “gap between the moment when the liquidity of the Central Bank begins to flow and the moment when cryptocurrency prices are really affecting.”
What Villaverde means is that The liquidity injected by the trimming of interest rates has not moved to digital assets.
As Cryptonoticia reported, the United States Federal Reserve (FED) made a reduction of 25 basic points, placing rates in the order of 4 to 4.25%.
When interest rates are also lowered, the cost of loans, which translates into an injection of money for markets. In these contexts, investors usually place their holdings in assets considered risk, such as cryptocurrencies, looking for greater profits, although they are exposed to high volatility.