At the end of a weekend filled with geopolitical events, cryptocurrency markets reacted to the escalation in the Middle East, experiencing sharp fluctuations. However, as if the markets decided to quickly reorganize themselves, momentum returned mid-week with signs of calm, helping to offset losses and even achieve gains.
Bitcoin, as usual, showed greater resilience compared to Ethereum. Despite the temporary decline in its market dominance, its position as a store of value remained stable, indicating that investors continue to view it as a hedge asset, especially during moments of geopolitical uncertainty.
Meanwhile, the U.S. dollar index fell to its lowest level in three years, influenced by President Trump's statements, who did not hide his criticism of Federal Reserve Chairman Jerome Powell amid his continuous postponement of interest rate cuts, sparking a broad discussion about the independence of monetary policy in the United States.
Bitcoin rebounds after the crash... and Ethereum stumbles
Last week, Bitcoin experienced a rapid drop of nearly 8.5%, falling from $106,000 to $98,000 within just 48 hours. However, the currency rebounded again, surpassing the $109,000 mark, restoring market confidence and proving its resilience once more.
As for Ethereum, despite following a similar path, its volatility was more intense, as it lost about 17% of its value, reaching $2,130, before returning today to $2,600, without successfully regaining its opening level.
A recent report from BlackRock indicates that Bitcoin historically achieves an average return of 37% within 60 days after geopolitical crises, which might lead some to be optimistic about a new upward cycle.
When does the alternative currencies season begin?
Despite the increases recorded by Bitcoin, the "alternative currencies season" or what is known as Altseason is still elusive. Historically, alternative seasons follow a strong upward wave of Bitcoin, as investors then start to convert their profits into smaller currencies in search of greater gains.
However, this pattern appears complicated in the current cycle for two main reasons: first, the huge number of new token currencies that have emerged over the past three years. Second, the absence of a "big vision" to lead the market, similar to what initial coin offerings (ICOs) did in 2017, or decentralized finance (DeFi) protocols in 2020.
New concepts like meme coins, BitcoinFi, and DePIN technologies may spark interest, but their impact has not yet risen to the level of leading a comprehensive investment wave. Even artificial intelligence, despite the media hype, still has a limited role in the sector.
Global markets are more optimistic despite tensions
While cryptocurrencies were immediately affected by political developments, traditional markets appeared more resilient. The S&P 500 index recorded a 2.56% increase, benefiting from expectations of the Federal Reserve easing interest rates and stabilizing oil prices following the calm on the Iranian-Israeli front.
The U.S. dollar index fell by 1.42%, following renewed calls from Trump to replace Powell, while U.S. Treasury bonds saw a decline in yields, indicating further easing trends.
The VIX volatility index also fell by 20%, signaling a decrease in investor fears, despite the fragility of the political situation.
Overall view: A political storm in the Federal Reserve
Trump not only publicly criticized Powell but also hinted at the possibility of appointing a new chair before his term ends. Many names have leaked, including Scott Pelley and Christopher Waller, as potential successors.
As Powell continued to adopt a cautious stance in his testimony before Congress, some members of the Federal Reserve appointed by Trump seemed to become more lenient, hinting at a possible interest rate cut in July if inflationary pressures continue to ease.
Looking ahead to next week: Is it the turn of alternative currencies?
The strong recovery witnessed in the market after the weekend shock reflects a prevailing sense of optimism. Despite the Federal Reserve's caution, global monetary policy is clearly moving towards further easing.
The most pressing question now: When will the upward momentum infect alternative currencies? The answer may be linked not only to Bitcoin's performance but also to the emergence of a real catalyst that stimulates capital flow towards smaller projects. Until then, Bitcoin remains the primary focus for investors seeking stability in a world that knows no calm.
