Widely followed crypto analyst Benjamin Cowen gave important warnings to investors about altcoin season. Cowen told investors that they should not wait for the season to start until the Federal Reserve (Fed) makes its next move. Arguing that the Fed should loosen monetary policy and reduce interest rates, Cowen stated that it is unlikely that altcoins will rise before this happens.
Benjamin Cowen analyzes the performances in recent cycles, highlighting that altcoins have outperformed Bitcoin (BTC) after the Fed started cutting interest rates. Cowen explains this situation with the following words:
“There are actually a lot of altcoins that are falling, there are more declines than rises, and so the advance/decline index is falling again, and it fell here as well in 2019, right before the Fed’s action.
It fell very, very quickly and then of course the Fed started cutting interest rates in July, so that move can be tracked because a lot of people are calling for altcoin season and things like that and for altcoins to outperform Bitcoin permanently, but the last “We did not reach this stage in the cycle until the FED cut interest rates.”
NEWS CONTINUES BELOW
Cowen adds that the Fed expects altcoins to lose value against Bitcoin, the largest crypto asset by market cap, before it starts lowering interest rates. The Fed reversing course and lowering interest rates is seen as an important factor that will lead to increased liquidity in the market and therefore altcoins to appreciate in value. Emphasizing that investors should be patient and closely follow the changes in the Fed’s monetary policies in this process, Cowen warns that altcoins may experience difficulties for a certain period of time before gaining value again.
“My expectation is that Bitcoin dominance will reach around 60%. “I think altcoins will continue to bleed the king… I wonder if you will see a huge increase in Bitcoin dominance over the next few months as Bitcoin continues to draw some sort of liquidity from the altcoin market.”
BTC’s dominance level currently stands at 55.39%, while the total crypto market cap excluding BTC (TOTAL2) stands at $1.049 trillion at the time of this writing.
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