Simean Koch: FED's Policies Pressure the Altcoin Market but Hope Still Exists

Cryptocurrency analyst Simean Koch scrutinized the effects of the US Federal Reserve's (FED) monetary policies on the altcoin market in his latest analysis. According to Koch, although the FED's tight monetary policy seriously pressures the altcoin season, hopes for the future are not entirely lost.

Trump-Powell Tension: Monetary Policy Becomes a Political Debate

US President Donald Trump continues to intensify his criticism of FED Chairman Jerome Powell. In his latest statement, Trump described Powell as "not smart, not political, just stupid," once again showing that monetary policy is at the center of polarization in US politics.

While Trump argues that the low-interest-rate policy is essential for both economic recovery and the sustainability of public debt, Powell is determined to keep interest rates high to combat inflation. Indeed, the last announced decision reinforces this stance: the FED kept the interest rate at 4.5%, which has been unchanged since December 2024.

Koch: The US Economy is Facing the Danger of Stagflation

The most critical element highlighted in Koch's analysis is the risk of stagflation. Stagflation refers to a challenging economic scenario where economic stagnation, high inflation, and unemployment occur simultaneously. In such an environment, the FED's maneuvering space narrows:

Interest rate hikes fuel unemployment,

Interest rate cuts can escalate inflation.

Trump argues that the FED should lower interest rates faster by citing the Eurozone as an example. The European Central Bank cut rates from 4.5% to 2.15%. In contrast, in the US, rates could only be reduced from 5.5% to 4.5%.

Why Are Altcoins Pressured by the High-Interest Rate Environment?

Koch indicates that the high-interest-rate environment has put serious pressure on cryptocurrencies—especially on altcoins. Historical data supports this:

The altcoin bull seasons of 2017 and 2021 occurred in low-interest-rate environments.

Current interest rates are even higher than those periods.

In addition, the quantitative tightening policy implemented by the FED is reducing liquidity in the market. This situation makes it even more difficult for altcoin prices to rise. According to Powell, the FED's resumption of balance sheet expansion may only be possible when interest rates are near zero, which points to the earliest being 2028.

Individual Investors Are Pulling Out, Institutions Are Turning to Bitcoin

According to the analysis, while individual investors have been distancing themselves from the crypto market since the summer, institutional investors—such as MicroStrategy and ETFs—continue to accumulate Bitcoin. This poses a serious threat to small altcoin projects that depend on individual investor interest.

Geopolitical Tensions and Internal Political Conflicts Are Also Influential

Koch also states that conflicts in the Middle East, rising energy prices, and the political tension between Trump and Powell have undermined market confidence, further weakening the demand for altcoins in this uncertainty.

Is the Altcoin Season Over? Not Yet.

Despite everything, Koch does not think that the altcoin season is completely over. In previous cycles, individual investors first withdrew from the market, followed by Bitcoin rising, and finally, altcoin rallies began (example: 2017 and 2021).

Therefore, according to Koch, the altcoin season is still possible; however, for this to happen, the FED needs to cut interest rates and show signs of easing in monetary policy. Although this does not seem likely in the near term, it is too early to completely disregard altcoins.


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