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As if manipulating traditional financial markets wasn’t enough, the Federal Reserve is now aiming its cannons at cryptocurrencies. Fed Chairman Jerome Powell’s statements last Wednesday sparked a strong negative reaction from Bitcoin. This trend spread to the rest of the tokens and now the Altcoin season is further away on the horizon.
“Federal Reserve law does not allow you to own Bitcoin and we do not intend to change the law,” Powell said during his anticipated press conference. Since then, cryptocurrencies have struggled to avoid a larger sell-off. The official’s statements have enormous significance, since they suggest that the incorporation of BTC into the US strategic reserves will be a contentious issue.
Naturally, this becomes a bucket of cold water for investors who were expecting a bull run for the first quarter of 2025. At the same pace as BTC holders liquidate their coins, so do investors in altcoins. The latter becomes evident with the collapse of the Blockchaincenter.net altcoin season index.
The latter experiences a huge collapse from 88 points on December 4 to the current 43 points. For an altcoin season to exist, at least 75% of the top 50 digital currencies need to outperform Bitcoin within 90 days.
Much of the top 50 cryptocurrencies are losing ground to BTC, pushing out the altcoin season. Source: Blockchaincenter.net
Will there be an altcoin season in 2025?
Powell’s statements become a cloud that could give way to a political storm between the Federal Reserve and the White House. Relations between Jerome Powell and Donald Trump are not the most cordial since they distanced themselves a few years ago. In fact, the former stated that he is ready to fight for his position in court if they try to remove him.
In any case, the altcoin season depends on some key players such as Congress and the Treasury Department. It is still unclear what the process that President Trump’s team will carry out to convert BTC into a strategic reserve will be. If it does, then the bull market could return with redoubled strength.
In that case, some investors would be extremely grateful to Powell for this cheap buying opportunity, which would be one of the last. Hypothetically, if the Treasury and the White House agree through executive law to purchase and manage funds in BTC, the Fed will have little to object.
It is also not clear what the Treasury’s position will be regarding this Trump initiative. Recently, this agency published a report on Bitcoin in which they concede that it works as “digital gold” within decentralized finance. Likewise, they pointed out some of the risks of investing in this asset.
As you can see, the environment is full of confusion and that explains the uncertainty among investors. At the end of this expected storm it will be known whether or not there will be an altcoin season in the coming months.
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