Altcoins are currently experiencing a significant downturn, with prominent cryptocurrencies like Ethereum, XRP, Solana, and Dogecoin deepening their monthly losing streaks. Ethereum has seen a decline of over 8% in the past 30 days and is on track to post its fifth consecutive month of negative returns. Similarly, XRP, Solana, and Dogecoin have experienced slumps ranging from 5% to 7% this month, setting them up for four straight months with losses, according to data from TradingView.
The bearish sentiment in the cryptocurrency market is underscored by market-implied probabilities derived from event contracts. Investors are estimating only a 2% chance that Ethereum will surge above $3,500 this month, a 6% chance for XRP to exceed $2.10, a 5% likelihood for Dogecoin to climb over $0.14, and a mere 1% for Solana to rally past $150. These probabilities are derived from contracts offered through Robinhood Derivatives, LLC and referenced from KalshiEx LLC or ForecastEx LLC.
Sean Dawson, head of research at the crypto options platform Derive.xyz, reflected on the ongoing pain in the market, stating, “It’s been a painful few months since October 10, and we’re likely in store for several more.” He emphasized the adverse macro conditions likely to persist through the first quarter. Dawson suggested that fears surrounding an exuberant artificial intelligence sector could be contributing to the recent sell-off in cryptocurrencies. “With BTC and crypto now heavily correlated to equities, fears of an inflated tech sector doesn’t bode well,” he noted.
Adding to the growing unease in the market, President Trump recently nominated Kevin Warsh as his choice for the new chairman of the Federal Reserve. Dawson characterized Warsh as a candidate perceived by many as hawkish, which has led to worries that expectations for rate cuts might be lower than anticipated, further compounding negative sentiment in the market.
Kairos Research co-founder Ian Unsworth also highlighted the importance of forthcoming legislation, particularly the market structure bill known as the CLARITY Act. Unsworth stated that the cryptocurrency sector has become increasingly integrated with traditional finance and that understanding this new bill is critical for navigating the industry’s next chapter. While acknowledging that the CLARITY Act could eventually offer a positive boost to the sector, Dawson cautioned that it is unlikely to drive prices upward in the short term. He forecasts that the current struggles will likely continue into early February.
