Benjamin Cowen, a well-known cryptocurrency analyst, has warned that there could be a significant downturn in the cryptocurrency market in the current quarter if the Federal Reserve (Fed) moves to lower interest rates. Cowen emphasized that investors should be careful about potential declines, especially in the altcoin market.
Highlighted the Risk for the Altcoin Market
In a recent video update, Cowen highlighted that monitoring the performance of altcoins against Bitcoin (BTC) is a key bearish indicator for the market amid the pressures of the upcoming recession. In April, he suggested that any collapse in the performance of altcoins against Bitcoin could be the beginning of an overall decline in the market.
Determining the market sentiment of altcoins, which represents the average individual’s market approach, is extremely important, according to Cowen. Failure to maintain stability in altcoin/BTC trading pairs could be a sign that the Fed may be overdoing it with its policies.
The focus of Cowen’s analysis is the TOTAL3 chart and the Bitcoin chart, which show the general state of the altcoin market. The TOTAL3 chart reflects the total value of the altcoin market, excluding Bitcoin, Ethereum (ETH), and stablecoins, and currently stands at $753.10 billion. Cowen stated that this chart should be watched carefully for signs of potential decline.
There May Be an Rise in BTC.D
Cowen also warns that if interest rate cuts are postponed to July instead of June as many expect, Bitcoin’s dominance in the cryptocurrency market (BTC.D) could increase in line with historical patterns. BTC.D rising means that altcoins are losing value faster than Bitcoin in a bearish market scenario.
In Cowen’s view, the Fed delaying rate cuts would signal a prolonged period of decline for altcoins, in line with patterns observed in past market cycles. This trend will be triggered by altcoins losing value while Bitcoin gains value in an uncertain monetary policy environment.
