Bitcoin Hits a New Record, But When Will the Big Altcoin Bull Run Begin? Analyst Reveals Conditions

Cryptocurrency analyst Simeon Koch made striking statements about the possibility of an altcoin season by evaluating the current macroeconomic conditions. According to Koch, Bitcoin and altcoin markets are currently under serious pressure.

The main reason for this is that interest rates on US government bonds are at their highest levels in recent years.

“Bitcoin and altcoins have a big problem right now: US government bond yields are higher than they have been in a long time. Historically, that has been very negative for risky assets like cryptocurrencies,” Koch said, adding that high bond yields indicate economic uncertainty, tight monetary policy and weak investment appetite.

These three factors negatively affect Bitcoin and altcoins because these assets usually gain value during periods of quantitative easing and when investors’ risk appetite is high. Koch states that high interest rates pose a threat to the economic health of the US in particular. Moreover, despite Donald Trump’s crypto-friendly stance, this picture is straining the US economy.

In the bond market, interest rates and bond prices are inversely proportional. If investors lose confidence in bonds and sell them, prices fall and interest rates rise. This increases the government's borrowing costs.

Recently, the credit rating agency Moody's downgraded the US credit rating from AAA to AA1. This step accelerated the loss of confidence in the market. Although Fitch (2011) and SP (2023) had previously taken similar steps, Moody's decision was also enough to shake investors' confidence.

High interest rates make it harder for both the government and the private sector to borrow. By 2025, the U.S. will have about $9.2 trillion in debt coming due and will need to be refinanced with new bonds. But current high interest rates make that process prohibitively expensive.

Koch says the U.S. has three potential paths to lower high bond yields:

• Boosting economic optimism: Strong economic data can boost investor confidence and stimulate bond demand.
• FED's interest rate cut: By lowering the policy rate, the relative attractiveness of existing bonds increases.
• FED returns to bond-buying program (Quantitative Easing): Large purchases of bonds from the market artificially push interest rates down.

According to Koch, all three scenarios could create a bullish wave in risky assets, especially altcoins, as periods of monetary easing have historically heralded bull markets for cryptocurrencies.

“Currently, there may be uncertainty in the bond markets. However, if this uncertainty is resolved, there is a high potential for us to see a sharp rally in the Bitcoin and altcoin markets. We need to be patient,” he concluded.

*This is not investment advice.