Q2 correction coming? Benjamin Cowen warns that Fed rate cuts could send the cryptocurrency into a downturn
A widely followed crypto analyst warns that the digital asset market could decline this quarter if the Fed starts cutting interest rates.
In a new video update, crypto strategist Benjamin Cowen tells his 797,000 YouTube subscribers that a decline in altcoins against Bitcoin (BTC) could signal the start of a market correction due to recessionary pressures.
“Will Bitcoin Recover Beyond April? Will it recover beyond the halving? [event in April]?
I think the answer to this question will depend on whether the alt/Bitcoin pairs collapse. If the alt/Bitcoin pairs break down in April, I think we could see a summer correction. Unless the alt/Bitcoin pairs collapse in April, this may not be the case. Or whether they might break in May.
But it just depends on how well the altcoins do, because in my opinion the altcoin represents the average consumer, the average retail investor. And if the average retail investor can’t prevent the collapse of alt/Bitcoin pairs, that means the Fed has probably gone too far.”
Source: Benjamin Cowen/YouTube
Looking at his chart, Cowen is closely watching TOTAL3 versus Bitcoin to see if the pair will fall. Traders use TOTAL3 as a proxy for the entire altcoin market as it tracks the market capitalization of all digital assets except Bitcoin, Ethereum (ETH), and stablecoins.
At the time of writing, TOTAL3 is trading for $753.10 billion.
Cowen also says Bitcoin's (BTC.D) dominance, which measures Bitcoin's share of crypto markets, could increase further based on historical precedent if interest rate cuts come in July rather than June as some expect.
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 now delayed until July, but we'll see if they last that long.
Again, enforcing rate cuts only means that altcoins will continue to bleed, because in the last cycle we saw dominance increase until rate cuts arrived – until rate cuts arrived. So why should I assume it would be any different? In fact, dominance increased a little further even after the rate cuts were introduced. So if interest rate cuts continue to push forward, that just means altcoins will continue to lock into Bitcoin.”
Source: Benjamin Cowen/YouTube
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