Altcoins fell harder than Bitcoin over the past 24 hours, with major tokens posting steeper declines as macro pressure pushed crypto prices lower, according to Decrypt and analysts cited in the report.
Total cryptocurrency market capitalization dropped 2.5% to $2.8 trillion. Ethereum fell 5.5% over the period to a $289 billion market cap, XRP lost 5.1% to $82.4 billion, and Solana slipped 3.8% to $60.6 billion. Bitcoin, by comparison, was down 3.1% on the day and 2.6% on the week, leaving it with a market cap of $1.6 trillion.
Inflation data and rate expectations added to the pressure
The decline came after the U.S. consumer price index rose 3.7% in the year to September. Decrypt reported on Wednesday that Myriad predictors were pointing to a 28% chance of an October interest-rate hike. The report noted that Myriad is a prediction market operated by Decrypt parent company Dastan.
Nick Forster, founder of options trading exchange Derive.xyz, said in a note shared with Decrypt that the shift pushed traders into "protection mode." He said hedging activity on the platform doubled, while whales pulled back on optimistic bets made in the spring.
"This immediate pull-back from long-term upside bets alongside aggressive short-term hedging shows a dramatic regime shift," Forster said. "With institutional participants rapidly reassessing their macro risk exposure as the path for interest rates turns murky again."
CoinShares says higher-beta crypto assets were hit the hardest
Luke Nolan, senior research associate at CoinShares, said altcoins tend to take the biggest hit when markets react this way.
"[It] seems to be high beta assets just got hit harder, similar to in equities as well, where the high flyers have seen outsized drawdowns in recent sessions," Nolan told Decrypt. "Alts are typically more sensitive to financial conditions, and tightening affects the premise of liquidity expanding."
Nolan also pointed to the U.S. dollar reaching a near 18-month high as another source of downward pressure across the crypto market. Over a medium-term horizon, he said, crypto tends to have an inverse correlation with the U.S. Dollar Index, or DXY. Part of that comes from crypto being priced in dollars, he said, while a stronger dollar also tightens liquidity and reduces risk appetite.
Bitwise Europe points to profit-taking after months of strength
Max Shannon, senior associate at Bitwise Europe, told Decrypt the move also reflects a hangover from altcoins’ "strength and momentum" over recent months.
Since the start of October, futures open interest in altcoins excluding Ethereum has fallen by $8 billion, Shannon said. In his view, that suggests traders have "taken chips off the table," a natural response after a strong run.
He said the same pattern is showing up in Ethereum. ETH outperformed Bitcoin for three consecutive months, the first time it has done so since March 2021, and investors have been taking profits since then. Ethereum ETFs recorded 11 straight trading days of net outflows totaling $782.8 million before a brief inflow on Tuesday, he said. Since then, money has moved back out, with CoinGlass data showing $129.5 million in net outflows.
"This price action is more of a consolidation period for altcoins that have already done well," Shannon told Decrypt. "Altcoins generally tend to exhibit high correlations with BTC in tough times and lower correlations, especially with idiosyncratic catalysts, in better market environments. Hence, for the near term, it is possible that these altcoins trade in lockstep with BTC, albeit more sensitively."
Short-term direction remains uncertain
For prices to recover, Nolan said he wants to see expectations of an October rate hike fall. For now, he said it is difficult to call a bottom for altcoins because he sees credible arguments for moves in either direction.
"I could see a situation where Bitcoin loses its support and altcoins likely bleed further," Nolan told Decrypt. "The opposite could also be true: this could be just a short-term correction, and we could be back into decent market conditions soon, which if Bitcoin was to push back decently above 80k, I could very well see an outsized up move for altcoins."