Cryptocurrency analyst Benjamin Cowen shared insights on the potential impact of the Federal Open Market Committee (FOMC) meeting on the cryptocurrency market and why it might ultimately cause an increase in Bitcoin’s BTC/USD market dominance.
What Happened: In his latest YouTube podcast, Cowen noted that despite the Federal Reserve maintaining interest rates at 5.5% and announcing a tapering of quantitative tightening (QT) starting in June, he believes this will only prolong the process of Bitcoin dominance reaching its peak.
He predicts that dominance will ultimately reach 60%, potentially by the end of the summer or in September. Currently, CoinMarketCap data highlights Bitcoin's dominance at 52.5%.
Drawing parallels to the 2019 market cycle, Cowen pointed out that the current pullback in Bitcoin dominance, which has caused excitement among altcoin enthusiasts, resembles the period preceding the first rate cut in July 2019.
He expects a similar scenario, with a brief altcoin rally followed by a final capitulation. Cowen adds that once dominance moves, it does so quickly, stating, "I think you’re likely going to see the dominance excluding stablecoins find some form of a higher low that it builds off of."
Cowen also touched upon the sticky nature of inflation and its implications for the crypto market. He noted that if inflation remains persistent, the Fed might be forced to maintain higher rates for longer, leading to a delayed pivot in monetary policy.
Also Read: Why Bitcoin Might Drop Another 20%: 10x Research
Why “Altcoins Are Oscillators”
Cowen also addressed the recent surge in altcoin prices, attributing it to investors using the QT tapering news as a catalyst for a short-term rally. However, he believes this move is unsustainable and will likely result in a lower high before support is broken, leading to a drop to range lows.
He stresses, "Altcoins are oscillators at best" suggesting that individual altcoins and the collective altcoin market are bound to bleed against Bitcoin over a long enough timeframe.
He foresees a final exit pump for altcoins before a significant decline and advises investors to keep an open mind and be prepared for potential volatility in the coming months.
The Trajectory Ahead
Looking ahead, Cowen expects Bitcoin dominance to continue its upward trajectory, with altcoins potentially experiencing a 40% drop to reach range lows. He anticipates that the true "altseason" will not occur until the post-halving year when dominance typically declines after a three-year uptrend.
Regarding Bitcoin’s short-term prospects, Cowen pointed out that the cryptocurrency has lost the 100-day moving average support, increasing the likelihood of a drop below the bull market support band in the coming months.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image created using artificial intelligence with Midjourney.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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