Is Crypto Bull Run Over? Expert Explains Why Altcoins Are Struggling

The political scenario in the US shifted in favor of the cryptocurrency industry when Donald Trump won the presidential election last November. As expected, the Trump administration has introduced several policies supporting crypto. Since November 5, 2024, the Bitcoin market has grown by 21.93%. However, altcoins have not seen the same level of gains.

Altcoins Struggling to Keep Up

While Bitcoin has seen strong gains, the altcoin market has risen by just 14% in the same period. Over the past 12 months, major altcoins have struggled:

• Ethereum is down 53.8%
• Solana has dropped 17.1%
• Cardano is down 6.7%
• Dogecoin has declined 1.6%

With altcoins trailing behind, it’s time to analyze why they are lagging and when a potential rally could occur.

Factors That Could Boost Altcoins

Several key factors could drive a turnaround for the altcoin market:

• Trump’s Pro-Crypto Stance – The administration continues to roll out crypto-friendly policies, which could eventually support altcoins.
• Upcoming Spot ETF Launches – Solana, XRP, and Litecoin spot ETFs are expected to launch soon, potentially increasing market interest.
• Tariff Policy Impact – Trump’s recent tariff hikes on China, Canada, and Mexico may influence market sentiment.
• Recession Fears – With the U.S. experiencing two consecutive quarters of negative GDP growth under Biden, economic uncertainty could affect investor behavior.

Tight Liquidity is the Real Issue

Despite these potential catalysts, crypto analyst VirtualBacon argues that none of these factors are responsible for the altcoin market’s stagnation. Instead, he highlights tight liquidity conditions in the U.S. as the primary reason.

According to VirtualBacon, three major factors are draining liquidity:

1. Fed’s Quantitative Tightening (QT)

The U.S. Federal Reserve is shrinking its balance sheet instead of injecting money into the economy. This means they are selling assets or letting them mature without reinvesting, effectively pulling money out of the financial system.

2. Reverse Repo Facility Drained

The Reverse Repo Facility, which previously provided cash reserves for financial institutions, has been depleted. This limits the liquidity available in the broader market.

3. Low U.S. Treasury General Account

A dwindling balance in the U.S. Treasury’s general account means the government has less money to spend, further reducing the cash circulating in the system.

The U.S. Debt Maturity Problem: Fed May Be Forced to Act

VirtualBacon also points out a looming debt maturity crisis in 2025. The U.S. government needs to refinance its debt, but if liquidity remains tight, there may not be enough buyers. To prevent a funding crisis, the Fed may have to intervene by:

• Ending Quantitative Tightening (QT)
• Injecting liquidity into banks
• Purchasing U.S. Treasuries

• Also Read :
•   US Inflation Cools Faster Than Expected – What It Means for Fed Rate Cuts & Bitcoin
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When Will Altcoins Rally?

VirtualBacon predicts that if the Fed does not add liquidity by this quarter, the financial system could come under severe stress. However, once liquidity conditions improve, a late-cycle altcoin rally is likely.

While the current phase is challenging, investors who position themselves wisely now could see major gains when the market turns.

While Bitcoin enjoys the spotlight, altcoins are quietly building up for their turn on the stage.