Did the Altcoin Season Dreams Fall Through After This Week's Jerome Powell Statements? Analyst Explained!

Crypto analyst Simean Koch highlighted the FED's monetary policy and its effects on the altcoin market in his latest analysis.

According to Koch, the FED's tight monetary policy threatens the altcoin season, but it has not completely destroyed hopes for the future.

U.S. President Donald Trump continues to criticize Fed Chairman Jerome Powell. In his latest press conference, he stated, "I don’t think he’s a smart guy. I don’t think he’s a political guy either. He doesn’t like me, I praised him and criticized him, but it didn’t work. Just stupid." This outburst clearly shows the extent of the conflict regarding monetary policy in U.S. politics.

Trump defends the low interest rate policy for both economic recovery and keeping public debt manageable. However, Powell is determined to keep interest rates high to combat inflation. With the decision announced last night, the FED kept the interest rate steady at 4.5%, marking the fifth unchanged interest rate decision since December 2024.

The most important point emphasized in Simean Koch's analysis is that the US economy is facing the risk of stagflation. Stagflation is a scenario in which high inflation and unemployment occur simultaneously with economic stagnation. In such an environment, the FED's room for maneuver is quite limited: Raising interest rates increases unemployment, while lowering interest rates can fuel inflation.

Trump advocates for the FED to lower interest rates more quickly by citing the Eurozone as an example, while Powell resists these pressures. The Eurozone has cut interest rates from 4.5% to 2.15% since last year; in the US, however, rates have only been able to decrease from 5.5% to 4.5%.

The high interest rate environment poses a significant threat to cryptocurrencies, especially altcoins. Historical data shows that altcoin bull seasons generally coincided with low interest periods. During the rallies in 2017 and 2021, interest rates were relatively low as well. However, interest rates are currently even higher than during those periods.

Additionally, the FED's balance sheet reduction program (quantitative tightening) is ongoing. This means that liquidity in the market is tightening. In this environment, it becomes difficult for altcoins to rise. According to Powell, the transition to expanding the FED's balance sheet is only possible if interest rates drop to zero, which, according to the FED's projections, may come up as early as 2028.

Another important point highlighted by Koch is the withdrawal of small investors from the market. Since the summer months, while the number of individual investors has decreased, institutional investors are continuing to accumulate Bitcoin, for example, through MicroStrategy or Bitcoin ETFs. This situation creates a serious problem, especially for small altcoin projects, as the prices of these projects are largely dependent on individual investor interest.

Additionally, the conflicts in the Middle East, rising oil prices, and tensions in US domestic politics are negatively impacting market confidence between (Trump and Powell). This is leading to a further decrease in demand for altcoins.

Simean Koch does not think that the altcoin season has completely come to an end despite such a negative outlook. Historically, individual investors have pulled out of the market first, then Bitcoin has risen, and in the final phase, altcoin seasons have begun. This scenario was repeated in both the 2017 and 2021 cycles.

Therefore, according to Koch, it is still possible for the altcoin season to begin despite the current pressures. However, for this to happen, it is essential for the Fed to cut interest rates and ease its monetary policy. Although it seems difficult for this to occur in the near future, it is too early to completely write off altcoins in this cycle.

*This is not investment advice.

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