Bitcoin and most alcoins continued their strong sell-off as sentiment in the industry worsens and as the crypto bull run ends.
Bitcoin (BTC) moved briefly below $104,000, while most altcoins, including blue-chip names like Ethereum (ETH) and Ripple (XRP) are in a bear market.
As a result, the Altcoin Season Index has plunged to 41, its lowest level since August 12 and much lower than the year-to-date high of 80. This crash has happened as the market capitalization of all cryptocurrencies excluding Bitcoin excluding Bitcoin and stablecoins, moved from $1.5 trillion to $1.1 trillion.
Cryptocurrencies have plunged because of the rising liquidations and panic selling among investors as the Fear and Greed Index moved to the fear zone. They have also reacted to the recent trade tensions between the US and China.
A common concern among most crypto investors is whether the industry will bounce back after this crash. There are reasons to anticipate a rebound in the coming weeks or months.
First, a closer look shows that the crypto market crash intensified after the Altcoin Season Index reached the extreme point of 80. In most cases, these tokens start to rebound when it moves below 25.
Therefore, with the index being at 41, there are chances that the crypto market will drop further and then bounce back this quarter.
Second, the crypto industry has some potential catalysts that will boost its performance. One of these is that the government shutdown will ultimately end, leading to the approval of multiple altcoin ETFs, which will boost the industry.
Third, American companies are publishing strong earnings, a sign that they have adjusted to Donald Trump’s tariffs. Analysts expect that the average earnings growth will be over 13%.
If this is correct, and if the guidance is strong, it means that stocks will recover and possibly boost the crypto market.
Additionally, history shows that Bitcoin and other altcoins bounce back after a steep decline. For example, altcoins plunged by 57% between the highest point in November last year and the lowest point in April. They then bounced back and pared back those losses, a situation that may happen soon.
The crypto market may also benefit once the Federal Reserve continues cutting rates to support the faltering economy.
