Will Altcoins Continue to Underperform Bitcoin (BTC) After Yesterday's FOMC Meeting?

Since the beginning of 2025, the altcoin market has largely underperformed Bitcoin, and experts believe that a similar scenario could continue

The crypto market has reacted positively to the latest FOMC meeting, where Fed Chair Jerome Powell announced keeping interest rates unchanged.

What Happened: At the FOMC meeting on Monday, May 7, Powell announced keeping interest rates in the range of 4.25%-4.5%, and there was no immediate reaction in the stock market to the news. However, the broader crypto market has reacted positively to this, with altcoins showing strength.

Ethereum (ETH) price is up 6%, moving to $1945 levels after a successful Pectra upgrade implementation on mainnet. Other digital assets are also showing modest 3-5% gains.

However, market analysts are not confident whether this momentum could continue for the next altseason. The altcoin market has shown a stark contrast to Bitcoin’s performance, with the top 140 tokens averaging a 58% decline since their peak on December 7, 2024, while Bitcoin has remained relatively stable, down only 3%. On the other hand, the Bitcoin dominance has surged from 49% to now at 65%, in the overall crypto market.

Related: Bitcoin Surges Above Key Resistance As FOMC Minutes Loom: What To Expect From BTC, ETH, ADA, DOGE And SOL Today?

How Will Altcoins Perform From Here?

At the FOMC meeting, Chair Powell also signaled that the central bank could begin cutting interest rates as early as this year, if the economy weakens significantly.

But in a recent interview, billionaire investor Stanley Druckenmiller expressed his skepticism over the Fed's ability to pivot towards rate cuts later in 2023.

Druckenmiller, known for his successful macroeconomic investment strategies, highlighted the strength of the labor market and the sticky nature of inflation as factors that could deter the Fed from slashing rates.

“I think it’s going to be very hard for the Fed to cut rates this year. People have gotten very focused on a rate cut, but I don’t see how they can cut rates this year. They might get one small, token cut in the fourth quarter, but I don’t see how they get to 25 basis points at the next meeting,” Druckenmiller said.

His comments come as the Fed Chair announced keeping interest rates unchanged at the last meeting. The central bank is widely expected to pause its tightening cycle at the next meeting.

suggest that the broader crypto market may be preparing for a significant shift in favor of Bitcoin.

Bitcoin Dominance Grows Amid Tightening Macro Conditions

Renowned crypto analyst Benjamin Cowen has issued a cautious outlook for altcoins relative to Bitcoin, forecasting continued declines in altcoin-to-Bitcoin (ALT/BTC) pairs as quantitative tightening (QT) persists.

Cowen projected that Bitcoin dominance could soon rise to 66%, reflecting a potential shift in market capital toward Bitcoin at the expense of alts. “ALT/BTC pairs are likely to drop to 0.32 from their current level of 0.34, with an eventual target of 0.25,” Cowen stated.

Thus, amid the tightening macro conditions, Bitcoin turns out to be a preferred asset for trading among investors. Another crypto analyst, Rekt Capital, mentions that Bitcoin dominance is approaching a critical resistance level, expecting it to surge to 71%, before the altseason begins.

Traders are keeping a close eye on Bitcoin dominance as it edges closer to this pivotal level. It will be interesting to see whether alts can continue with this rally ahead.