Recent data released from the US provided a visible lift to the market, also supported by a dovish Federal Reserve and the Quick Rate Adjustment (QRA). The employment data released on Friday depicted numbers weaker than forecasted, with Non-Farm Payrolls showing net additions of 175,000 jobs against the predicted 240,000.
The Unemployment Rate also rose modestly to 3.9% as opposed to the anticipated 3.8%, whereas the Month-over-Month Average Hourly Earnings increased by a mere 0.2%, less than the expected 0.3%. These numbers indicate defusing inflation concerns, thus shaping the coming monetary policy.
Federal Reserve’s Influence on Financial Markets
Concurrently, the dovish postures of the Federal Reserve and the Treasury have led to a dramatic flip in interest rate expectations, bringing down the US 2-year Yields from above 5% to nearly 4.7%. This sizeable yield decrease, as a result, poses doubts about the US Dollar rally momentum that the market has recently witnessed.
As investors adjust their outlook on rate cuts in the upcoming year, the money market looks more accommodating to the softer dollar regime.
Cryptocurrency Market Response
The cryptocurrency market reacted positively to the general financial market. Consequently, the Bitcoin spot Exchange Traded Funds (ETFs) experienced significant net inflows totalling $378.3 million. The resurgence of interest was spotlighted by the Grayscale Bitcoin Trust (GBTC), which saw a positive inflow for the first time in this context.
The excitement, consequently, in the crypto sector is partly due to the general economic situation, which now supports riskier assets such as cryptocurrencies.
Outlook on Retail Investors and Altcoins
With the latest market dynamics, retail investors mainly stayed out of the markets, especially the cryptocurrency markets, even as Bitcoin is about to hit its all-time high (ATH) level. The return of these investors is expected to happen near the recovery of the altcoins market, which is forecasted to be after summer.
In the past, retail investors got back into the market as altcoins – lesser-known cryptocurrencies – began to rise in value, indicating a possible ripple effect across the crypto market. This pattern also suggests that there would still be early birds for those who want to enter the market before the broader market participation. Forecasts are that after the summer, there will come a large inflow in altcoin investments, possibly leading to the scion of the “altseason.”
Moreover, the market capitalization of altcoins is demonstrating a technical formation that might represent a big movement in the near future. The formation of an inverse head-and-shoulders pattern in the Total Altcoin Market Cap indicates a potential breakout that might push the market cap to $4 trillion, according to analysts.
As a result, this scenario, expected to unfold over the next few months, signals substantial growth potential in the altcoin market, which could attract significant retail investor interest once again.
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