A widely followed crypto analyst is warning that the digital asset market could decline this quarter if the Fed starts cutting rates.
In a new video update, crypto strategist Benjamin Cowen tells his 797,000 YouTube subscribers that if altcoins start breaking down against Bitcoin (BTC), it could indicate the start of a market correction due to recessionary pressures.
“Will Bitcoin rally beyond April? Will it rally beyond the halving [event in April]?
I think the answer to that question is going to be dependent on if alt/Bitcoin pairs break down. If alt/Bitcoin pairs break down in April, then I think you could get a summer correction. If alt/Bitcoin pairs do not break down in April then you might not. Or if maybe they break down in May.
But it just kind of depends on how well the altcoins hold up because I think the altcoin represents the average consumer, the average retail investor. And if the average retail investor can’t keep alt/Bitcoin pairs from breaking down, that means that the Fed has likely gone too far.”
Looking at his chart, Cowen is closely watching the TOTAL3 versus Bitcoin to see whether the pair will decline. Traders use TOTAL3 as a proxy for the entire altcoin market as it tracks the market capitalization of all digital assets excluding Bitcoin, Ethereum (ETH) and stablecoins.
At time of writing, TOTAL3 is trading for $753.10 billion.
Cowen also says if rate cuts come in July and not in June as some expect, then Bitcoin’s dominance (BTC.D), which measures Bitcoin’s share of the crypto markets, may continue to rise based on historical precedence.
In a bearish market, a rising BTC.D suggests that altcoins are losing value faster than Bitcoin.
“I know [the probability of] rate cuts are being pushed out until July now, but we’ll see if they make it that long.
Again, rate cuts being pushed out just means alts are going to keep on bleeding because last cycle we saw dominance go up until rate cuts arrived – it was until rate cuts arrived. So why should I assume that it would be any different? In fact, even after rate cuts arrived dominance continued to go up for a little bit. So again, if rate cuts keep getting pushed further and further out, it just means the alts are going to keep on bleeding to Bitcoin.”
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