Altcoins Plunge 80% to 90% Amid Geopolitical Tensions and Rate Debate

Market expert Tracer has expressed concerns about the current state of altcoins, describing the market as the most divided he has ever seen. While Bitcoin (BTC) remains relatively stable, many altcoins have experienced significant declines, with some dropping between 80% to 90%. Despite the current uncertainty, Tracer suggests that an altseason could be approaching.

Tracer’s analysis, shared on a social media platform, identifies several factors contributing to the current market conditions. Geopolitical tensions, particularly the conflict between Israel and Iran, have created what some investors perceive as a “black swan” event, leading to heightened emotional responses and market overreactions. However, recent diplomatic developments, including Iran’s willingness to engage in talks, could signal a de-escalation of tensions and potentially restore market confidence.

Another significant factor influencing Bitcoin’s performance is the ongoing debate around interest rates. Tracer highlights that President Donald Trump is advocating for lower rates to reduce debt servicing costs, which would make Bitcoin a more attractive investment. He recalls that a similar environment in 2021 fueled a dramatic rally, propelling Bitcoin from $4,000 to an all-time high of $69,000. Recent comments from Federal Reserve officials, suggesting that rate cuts could begin as early as July, add to the growing optimism regarding Bitcoin’s potential recovery.

As the market transitions from uncertainty to a more stable phase, Tracer emphasizes the importance of monitoring Bitcoin’s dominance. Currently, institutional investors are heavily accumulating Bitcoin, resulting in significant inflows. However, Tracer believes that for an altseason to commence, Bitcoin must become too expensive for large players, prompting a rotation of capital into alternative cryptocurrencies.

Historically, Bitcoin dominance has hovered around 65% before capital begins to flow into altcoins. Tracer notes that this threshold is nearing, signaling a potential shift in market dynamics. He suggests that the upcoming summer, typically a slower season for trading activity, could serve as a critical window for investors. This period may present one last opportunity to position themselves before the anticipated lift-off that the expert predicts.

Adding to the excitement, Tracer points to the possibility of a Solana (SOL) exchange-traded fund (ETF) approval as a catalyst for increased liquidity in the market. If approved by late summer, this could coincide with a resurgence in trading activity and set the stage for altcoins to see a major surge. Despite the current turmoil and major retracements, Tracer believes that the conditions for altcoins to see a resurgence are aligning. With Bitcoin’s dominance at significant levels and many altcoins trading at distressed prices, he encourages investors to view this moment as a strategic entry point.

When writing, Ethereum, the largest among altcoins, trades at $2,421, recording losses of 9% in the monthly time frame and over 30% year-to-date.