April 10, 2024 1:15 PM | 2 min read
A well-known crypto analyst has warned investors about potential market volatility in the coming months, citing the Federal Reserve’s monetary policy decisions as a key factor.
Market Analysis: In a recent Youtube video, Benjamin Cowen emphasized the importance of monitoring the performance of altcoins compared to Bitcoin (CRYPTO: BTC).
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Cowen pointed out that a breakdown in altcoin dominance (measured in altcoin/BTC pairs) in April could signal a potential market correction in the summer.
“If alt/Bitcoin pairs break down in April, then I think you could get a summer correction,” Cowen stated.
On Wednesday, Bitcoin experienced a sharp drop, trading as low as $67,574, according to CoinMarketCap data.
Cowen explained that altcoins often represent the sentiment of retail investors in the market. A decline in altcoin dominance could indicate waning enthusiasm among retail participants, potentially leading to a market downturn.
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The Impact of Fed Rate Cuts
Cowen also highlighted the potential impact of Federal Reserve rate cuts on the cryptocurrency market. While the possibility of rate cuts has been pushed back to July, Cowen expressed doubts about whether they will actually happen.
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 highlights the complex relationship between macroeconomic factors and the cryptocurrency market.
Investors looking to navigate this ever-changing landscape can benefit from attending Benzinga’s upcoming Future of Digital Assets conference on Nov. 19.
Read Next: Coinbase And Google Cloud Join Forces To Secure Ethereum With EigenLayer
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