Analysts expect a dovish Federal Reserve meeting and a $2 billion Treasury buyback to inject liquidity and support the next rally.
The crypto market has yet to recover from the Crypto Black Friday crash and continues to show volatility. Over the past 24 hours, the total market cap has dipped by 1.4%, with all top 10 cryptocurrencies in the red, except stablecoins. Moreover, the monthly looses extend to over 2%
However, an analyst believes the bull run is far from over. According to him, the current correction phase won’t last long, and an altcoin rally is likely ahead.
In a detailed post, Crypto Dan pointed to the amount of capital flowing into the market as a key indicator of where the cycle stands. The analyst compared the current conditions to previous peaks and corrections.
In Q1 2021, massive capital inflows signaled an overheated market nearing the end of a bull run. Similarly, March and December 2024 saw smaller inflows, resulting in mid-cycle corrections rather than full reversals.
By contrast, Dan noted that the current market appears far less overheated. This suggests that the current correction’s scale and duration are likely to be limited.
“Currently, the level of overheating is smaller than in the previous two instances, and the magnitude and duration of the correction are expected to be shorter,” he wrote.
History also points to what could come next. During past cycles, altcoins have typically staged powerful rallies as the market entered its strongly overheated phase.
If the pattern repeats, investors could soon see renewed momentum in alternative cryptocurrencies as confidence returns.
“The current crypto market appears to be in a relatively small correction phase, and a strong surge in altcoins is likely to occur alongside intense overheating at the end of the cycle. The probability that the current bullish cycle has already ended remains low,” the analyst concluded.
Meanwhile, upcoming bullish catalysts support this view. Key macroeconomic events could serve as potential fuel for the next market surge.
According to the CME FedWatch Tool, there is a 99.9% chance that the Federal Reserve will slash interest rates by 25 basis points today.
“With the Fed widely expected to cut rates again today, and US-China trade tensions easing again, it’s no surprise we’re seeing a rebound in crypto markets,” Kevin Rusher, founder of RAAC told BeInCrypto.
Crypto analyst Ash Crypto noted that the expected rate cut has already been priced in, meaning the market reaction will likely be limited. He emphasized that Federal Reserve Chair Jerome Powell’s remarks will carry greater significance.
According to Ash Crypto, recent economic indicators are increasing the pressure on the Fed to take a more dovish stance. These include the weak job market, a cooler-than-expected Consumer Price Index (CPI) report, and slow economic activity amid the ongoing government shutdown.
These indicators, he said, signal that the US economy is losing momentum, reinforcing expectations that the Fed will lean toward additional easing measures.
“For the first time in 2025, bank reserves at the Fed have fallen below $3 trillion. This means the Fed will also be thinking about ending its QT program. Even JP Morgan and Goldman Sachs are expecting that the Fed QT program will end at October’s FOMC meeting. This will probably be the first major risk-on signal since Q3 2019, when the Fed ended the QT program. I’m expecting this FOMC meeting to be more dovish, which will provide the fuel for the next rally,” Ash Crypto stated.
At the same time, the analyst Crypto Rover revealed that US Treasury recently completed a $2 billion buyback of its own debt in what he described as “stealth quantitative easing.” Reducing the supply of government bonds and injecting cash into the system eases financial conditions. This is widely considered bullish for risk assets such as cryptocurrencies.
Analysts maintain that these macroeconomic factors could spark the next rally. If the Fed ends QT and adopts a dovish approach, market conditions may turn in favor of risk assets. Combined with less overheating, the crypto market appears set for a continued bull run rather than a downturn.
