Altcoin prices have recovered as some investors took advantage of the recent dip following a significant downturn in the market.
Well-known tokens such as Pepe (PEPE), Solana (SOL), JasmyCoin (JASMY), and Bonk (BONK) experienced rises in their prices, climbing by double digits from their Monday lows.
Pepe, the well-known Ethereum (ETH) meme coin, increased to $0.0000065, while SOL, JASMY, and BONK also saw substantial gains.
Three key factors contributed to the rise in these altcoins. Firstly, there is optimism surrounding potential negotiations between the US and other nations. While tensions with China have escalated, indications of progress in trade discussions with Israel, Japan, and Vietnam have emerged.
This optimism has fostered a risk-on sentiment among investors, which is reflected in the upward movement of the stock market. Futures associated with the Dow Jones and S&P 500 indices surged by over 2%, offsetting some recent losses.
Pepe, Jasmy, Solana, and Bonk surged as expectations for Fed rate cuts increased
However, market perceptions have shifted, with expectations now leaning towards more cuts later in the year. The often-referenced CME FedWatch tool indicates a 30% chance of a cut in May, up from below 20% the previous week. Goldman Sachs forecasts three cuts in the latter half of the year, while a JPMorgan analyst cautioned that action from the Fed may occur as soon as May.
Morgan Stanley analysts have also warned that Trump’s tariffs could threaten economic growth, leading to further calls for rate cuts, with estimates suggesting at least three reductions within the year.
Altcoins like Solana, Pepe, Jasmy, and Bonk typically perform well in a low interest rate environment.
Lastly, the recent price movement might be indicative of a dead cat bounce—a short-lived recovery in a declining market before the downward trend resumes. This situation is often referred to as a bull trap.
Additionally, Solana benefited from management changes at Janover, a smaller Wall Street firm, which began to accumulate the coin after raising $42 million from investors like Pantera, Kraken, Arrington Capital, and The Norstar Group. Their aim is to establish themselves as the MicroStrategy of Solana, one of the leading blockchains in the sector.