Why Altcoins Crushed It On Monday

As groups, financial markets tend to overreact to breaking news that affects their constituents. This tendency is particularly acute in the case of cryptocurrencies, as they are considered — justifiably — to be inherently volatile investments.

This overreaction to the news and head-spinning volatility played out strongly in cryptocurrencies last week as weaker-than-expected jobs growth renewed fears of economic weakness in our near future.

But many crypto-heads felt that their fellow investors had gone too far in their selling and began to view the sector as a whole as oversold. Since the weekend, they have accumulated many coins and tokens, with popular altcoin Avalanche (AVAX 2.90%) up nearly 15% since 4pm ET last Friday, climb (SUI 1.77%) following close behind with a pop of nearly 14% and stacks (STX 6.87%) also posting a double-digit gain at just under 13%.

No news is good news…for now

Those investors entered a week of trading that, so far, has been devoid of sentiment-draining news affecting cryptocurrencies. We also head to the next Federal Open Market Committee (FOMC) meeting next week, where the Federal Reserve (Fed) body is expected to decide whether to change its key interest rates.

A rate cut has been expected for some time as inflation data from the federal government indicated that the economic frenzy may be easing. Prevailing monetary theory says that higher rates reduce consumer spending and inspire investors to lock up their money in reliable assets that pay a relatively high yield (in the form of bond coupons, for example). Conversely, lower rates lead to more crowded spending and increase the appetite for riskier investments.

The FOMC meeting is coming up soon — it starts next Wednesday. It’s clear that hopeful crypto investors are looking forward to this and a very possible rate cut, rather than anxiously looking back at the discouraging jobs data.

An equipment manufacturer produces solid numbers

Another piece of news that may affect crypto sentiment for the better was a new analyst take on one of the industry’s most important equipment suppliers: the graphics processing unit (GPU) maker. Nvidia. On monday, City GroupAtif Malik reiterated his very bullish take on the stock, backed by a solid set of growth numbers.

According to Malik, citing data on the graphics segment from Mercury Research, quarterly, Nvidia showed that the company’s market share in terms of units increased by 50 basis points to 90.5% in the gaming segment. This is well above the average over the last three years of 82%. The company also managed to increase GPU unit shipments to its data center customers by 19% sequentially to reach a market share of nearly 93%.

Powerful GPUs are essential in mining some of the top cryptos on the scene, such as the long-time #1 Bitcoin. The increase in technology sales comes from many sources, but since cryptocurrency production is a big one, this is most likely an indication of strong and sustainable mining demand.