A widely respected cryptocurrency analyst has warned that digital asset markets could fall this quarter if the Federal Reserve starts cutting interest rates.
In a new video update, cryptocurrency strategist Benjamin Cowen tells his 797,000 YouTube subscribers that if altcoins begin to crumble against Bitcoin (BTC), it could indicate a market correction may be in the offing due to recessionary pressures.
“Will Bitcoin rebound after April? Will there be a rebound after the halving (April event)?
I think the answer to that question depends on whether the alt/Bitcoin pair breaks down. I think we could get a summer correction if the alt/Bitcoin pair breaks in April. Unless the alt/Bitcoin pair collapses in April, that might not be the case. Or it could break down in May.
But that depends on how well the altcoins hold up because I think they represent the average consumer, the average retail investor. And if the average retail investor can’t prevent the alt/Bitcoin pair from collapsing, it means the Fed has gone too far.”
Looking at his charts, Cowen is closely watching whether TOTAL3 vs. Bitcoin declines. Traders track the market capitalization of all digital assets except Bitcoin, Ethereum (ETH), and stablecoins, so they use TOTAL3 as a proxy for the overall altcoin market.
As of this writing, TOTAL3 is trading at $753.1 billion.
Cowen also said that if the interest rate cut comes in July rather than June as some expect, Bitcoin’s Dominance (BTC.D), which measures Bitcoin’s share of the cryptocurrency market, could continue to rise in line with historical precedent.
The rise of BTC.D in a bear market suggests that altcoins are losing value faster than Bitcoin.
“We know the rate cut is currently being delayed until July, but we’ll see if it takes that long.
Again, the push for rate cuts means Alt will continue to hemorrhage. Because in the last cycle we saw dominance rising until the rate cuts arrived. That was until the rate cut arrived. So why should we assume it would be any different? In fact, dominance continued to rise slightly even after the rate cut. Again, if interest rate cuts continue to be pushed further, it only means that alternative investors will continue to bleed into Bitcoin.”
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