Political Shift in the US Favoring Cryptocurrency

The political scenario in the US shifted in favor of the cryptocurrency industry when pro-crypto candidate Donald Trump emerged victorious in the US presidential election last November. As expected, the Trump administration has introduced several pro-crypto policies. The Bitcoin market has grown by at least 21.93% since November 5, 2024. However, it appears that the Altcoin market has yet to benefit from this political shift.

The Altcoin market has surged by just 14% during this period. Notably, in the past 12 months, Ethereum has declined by 53.8%, Solana by 17.1%, Cardano by 6.7%, and Dogecoin by 1.6%. It is high time to analyze why altcoins are lagging and when they could rally. Ready?

Elements Capable of Moving the Alt Market: The General Belief

1. Trump Administration’s Pro-Crypto Stand: Expected to support the altcoin market through recently introduced pro-crypto policies.

2. Proposed Altcoin Spot ETF Launches: Upcoming launches for Solana, XRP, and Litecoin spot ETFs are anticipated to boost the market.

3. Aggressive Tariff Policy: Trump’s recent import tariffs on China, Canada, and Mexico may influence market behavior.

4. Rising Recession Fears: The US has experienced two quarters of negative GDP growth under Biden, which can sway market dynamics.

However, VirtualBacon questions all these arguments, asserting that none truly explain the current stagnation in the Altcoin market.

> 🚨 Is the Crypto Bull Run Over? 🚨#Bitcoin is still in an uptrend, but altcoins are struggling. Meanwhile, Trump is pushing pro-crypto policies, yet nothing is moving.
>
> So what’s really happening? And when will altcoins finally take off?
>
> Here’s what you need to know 🧵👇
> — VirtualBacon🦇🔊 (@VirtualBacon0x) March 12, 2025

Experts Advise Focusing on the ‘Liquidity Element’

VirtualBacon argues that liquidity remains tight in the US market due to three major factors:

1. Fed’s Balance Sheet Shrinking: The Federal Reserve is engaged in Quantitative Tightening, reducing available money in the system.

2. Reverse Repo Facility Drained: Cash reserves accessible to financial institutions are being depleted elsewhere.

3. US Treasury’s General Account Low: Limited government funds mean less money circulating in the economy.

When Will Liquidity Return and Boost Altcoins?

VirtualBacon highlights the US debt maturity issue, stating that the Fed must intervene to reverse liquidity conditions. A significant amount of US government debt is maturing in 2025, and without sufficient liquidity, there might not be enough buyers. The Fed may need to step in to inject money into the market to ensure smooth refinancing and avoid system stress.

Without liquidity addition by this quarter, issues related to low reserves could arise. VirtualBacon identifies ending Quantitative Tightening, injecting liquidity into banks, and purchasing US treasuries as crucial actions for improving liquidity.

In conclusion, altcoins are not profiting yet due to tight liquidity, not a halted bull run. Liquidity conditions should improve by this quarter, possibly leading to an altcoin rally in the late cycle. Positioning now may yield substantial gains later.