Prices of major cryptocurrencies, led by Bitcoin, saw a significant increase on Tuesday morning following a significant US announcement. US President Donald Trump announced new tariff exemptions for some imported electronic devices, boosting investor confidence.
Bitcoin rose above $85,000, while Ethereum followed suit to a lesser extent. This surge came after Trump announced a study into adjusting tariffs on cars and auto parts imported from Mexico and Canada.
These announcements were accompanied by other indicators, including previous exemptions for smartphones and computers. However, new investigations into semiconductor imports have been opened, adding further tension to the markets.
Bitcoin declining dominance suggests a potential shift in market dynamics.
Bitcoin’s dominance of the cryptocurrency market reached 63.3%, a decline after a sustained rise since mid-March. This decline in dominance is often interpreted as a sign of the beginning of the altcoin season, characterized by investors shifting to other cryptocurrencies.
Many analysts consider this movement a potential indicator of the beginning of a new allocation cycle, where portfolios are rebalanced. Furthermore, these changes are of interest to traders seeking rapid growth opportunities in assets with a lower value compared to Bitcoin.
$65,000 Region Represents Psychological and Technical Support for Bitcoin
The $65,000 level for Bitcoin is considered a critical support zone. The price has remained stable above this level despite market volatility. This stability suggests the potential for dividend distributions by short-term investors.
Conversely, long-term investors have remained firm on their holdings, demonstrating their confidence in the future of the currency. However, a continuation of this behavior could open the door to sudden price movement, especially in the event of changes in demand or supply.
Market Psychology Reveals the “Hope and Worry” Phase
Several analytical reports have indicated that the market has entered a phase known as “hope and denial,” which is part of the investor psychological cycle. At this stage, mixed feelings prevail, ranging from caution to optimism. Miners tend to sell a portion of their holdings in an attempt to lock in profits before potential corrections occur, while larger players with long-term investments continue to hold their positions unchanged. Such divergence in investor behavior typically leads to significant market volatility. Therefore, analysts advise caution in the coming weeks, especially as new regulatory decisions approach.
Are we on the cusp of altcoin season?
Recent trends point to the potential onset of altcoin season, during which the market experiences structural shifts. Investments flow into smaller cryptocurrencies after Bitcoin reaches its temporary peak. Analysis by COINOTAG confirms that a decline in dominance to 63.3% often marks the beginning of bullish waves in alternative assets. Previous cycles have observed that altcoin season begins after Bitcoin stabilizes within a certain price range, followed by strong movements in other currencies.
Geopolitical situation complicates market developments
On the political front, markets continue to closely monitor developments in US trade policy. Trump’s comments regarding tariff adjustments have impacted multiple markets, including cryptocurrencies.
Despite some exemptions, his administration has initiated new investigations into sensitive imports, including microchips. Trump has stated that he may announce new tariff decisions within days.
All of these factors have created an environment of caution and anticipation, making gold and Bitcoin preferred options for hedging at the moment.
Market reactions reflect concerns about a potential economic slowdown
Financial institutions, including the Federal Reserve, have expressed concern about a slowdown in growth as a result of these policies. Fed Governor Raphael Bousik also indicated the need to keep interest rates unchanged temporarily.
Technical warnings and future analysis of Bitcoin behavior
The uncertainty has led to a reshuffle in investment priorities. Some investors have shifted from stocks to cryptocurrencies, while others prefer traditional assets such as gold and Treasuries. However, cryptocurrencies remain an attractive option for those with a higher risk tolerance. The market has repeatedly proven its resilience to sudden shifts. Bitcoin’s average daily movement has shown significant volatility over the past week. Some analysts point to signs that the market is returning to an “overbought” state, which requires caution. At the same time, most analysts agree that the $65,000 level represents a pivotal point. If this level is broken, the market could experience a strong sell-off. However, if it continues to support it, it could open the door to further upside in the near future.
What to watch for in the coming days?
Investors are now focusing on several factors, most notably: developments in US tariffs, changes in Fed policy, and altcoin trading volume. Bitcoin’s declining dominance is also a key indicator to monitor. If this trend continues, we may see more liquidity pumped into other coins such as Solana, Cardano, and Polkadot. At the same time, the market may demonstrate greater flexibility in reacting to global economic news.
Bitcoin Leads the Way, but Altcoins Step Out of the Spotlight
Despite price volatility, Bitcoin remains the primary driver of the cryptocurrency market. However, its diminishing dominance signals an impending shift in the nature of the market. Despite the current optimism, investors should exercise caution and closely monitor technical and economic developments.
The coming weeks are expected to reveal clearer trends, whether Bitcoin continues to stabilize or altcoins rise. In either case, the current situation requires flexibility and a well-thought-out strategy to navigate an increasingly complex market.
