Ethereum, Ripple and other altcoin trading volumes decrease… How long will investor sentiment remain weakened

Short-term uncertainty grows, liquidity contraction

Daily trading volume falls to about half

Announcement of reduction in quantitative tightening acts positively

Prolonged shutdown is negative for the market

Jerome Powell, chair of the U.S. central bank (Fed), has taken a cautious stance on a December rate cut, and the cryptocurrency market that had fallen is showing weakness despite signs of easing trade tensions between the U.S. and China. Experts predict a long-term uptrend while also warning of the possibility of increased short-term volatility.

According to the industry on the 2nd, Bloomberg recently reported, "With expectations for further rate cuts lowered by Powell's remarks, discussions of trade negotiations between President Trump and President Xi Jinping have increased market volatility," adding, "Unlike some stock markets that showed gains, the cryptocurrency market has been weak and investor sentiment appears to be contracting."

According to domestic crypto exchange Upbit, leading altcoin Ethereum (cryptocurrency other than Bitcoin) is trading around 5,770,000 won, having given up most of its one-month gains. Over the same period, XRP (formerly Ripple) is down 8% at 3,724 won, Dogecoin is down 16% at 277 won, and Solana is down 6% at 278,500 won.

Trading volumes have slowed as investors take a wait-and-see stance. According to CoinMarketCap, daily cryptocurrency spot trading volume, which had surged to 1 trillion dollars in early last month, has recently fallen to about half, at 365.3 billion dollars. The sharp drop in trading volume is interpreted as a result of tightened market liquidity due to increased short-term uncertainty.

On the other hand, the Fed's announcement of the end of quantitative tightening (QT) is raising expectations for a long-term rebound. Nick Luck, head of LVRG Research, said, "Short-term volatility continues, but the Fed's announcement of ending QT in December is a positive signal for risk assets such as cryptocurrencies," and he forecasted, "Funds are likely to flow in over the coming months, allowing Bitcoin and Ethereum to regain upside potential."

At the same time, institutional investor buying is flowing in centered on Ethereum. Cryptocurrency analytics firm SwissBlock analyzed, "After the large-scale cryptocurrency liquidation event in October, the market is finding stability," adding, "In particular, Ethereum is attracting demand-based buying as spot trading volume increases." David Duong, head of Coinbase Research, also stated, "Institutional participation in Ethereum and Solana staking exchange-traded products (ETPs) is becoming full-scale."

Bitmain, the world's largest Ethereum-holding company, has purchased about 483,000 Ethereum (approximately 2.7076 trillion won) since the 10th, when cryptocurrency prices plunged.

There are also forecasts that the recent pause in gold prices could lead to a rise in risk assets. Cryptocurrency strategist Michael van de Poppe said, "The fact that gold prices have fallen by about 10% and entered an adjustment phase can act as a signal for the revival of risk-asset preference," and predicted, "In such an environment, the altcoin market is likely to benefit going forward."

Some worry that a prolonged U.S. government shutdown could increase market uncertainty. Marcin Kazmierczak, co-founder of Redstone, said, "With a U.S. government shutdown (temporary work stoppage), major economic data are not being released, making the Fed's decision on further rate cuts uncertain," and forecasted, "Such uncertainty is likely to act as a factor that expands cryptocurrency market volatility toward the end of the year."

Kang Min-seung, Bloomingbit reporter minriver@bloomingbit.io