A popular crypto analyst has issued a warning to investors, suggesting that the Federal Reserve’s monetary policy decisions could significantly impact the cryptocurrency market in the coming months.
What Happened: In a recent Youtube video, Benjamin Cowen emphasized the importance of monitoring the performance of altcoins relative to Bitcoin BTC/USD.
According to him, a breakdown in altcoin dominance (measured in altcoin/BTC pairs) in April could signal a potential summer correction for the broader cryptocurrency market.
“If alt/Bitcoin pairs break down in April, then I think you could get a summer correction,” Cowen stated.
Bitcoin nose-dived in early trading hours on Wednesday, trading as low as $67,574, per CoinMarketCap data.
He explained that altcoins often represent the sentiment of retail investors in the market.
A decline in altcoin dominance could therefore indicate waning enthusiasm among retail participants, potentially leading to a market downturn.
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Fed Rate Cuts: A Double-Edged Sword
Cowen further highlighted the potential impact of Federal Reserve rate cuts on the cryptocurrency market. While the probability of rate cuts has been pushed back to July, Cowen expressed skepticism about whether they will materialize at all.
He drew parallels to the previous cryptocurrency market cycle, where altcoin dominance increased until the Fed implemented rate cuts.
“Dominance continued to go up for a little bit” even after the rate cuts, Cowen noted.
This historical trend, according to Cowen, suggests that delaying rate cuts could further weaken altcoins relative to Bitcoin.
What’s Next: Cowen’s analysis underscores the complex interplay between macroeconomic factors and the cryptocurrency market.
Investors seeking to navigate this dynamic environment can benefit from attending Benzinga’s upcoming Future of Digital Assets conference on Nov. 19.
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