Famous crypto analyst Benjamin Cowen has warned that if the Federal Reserve (Fed) starts to cut interest rates, the crypto market could see a significant downturn in the current quarter. The analyst focused on the altcoin market in particular, urging investors to be cautious of a potential decline.
High Risk Warning Issued for Altcoin Market
In a recent video update, Cowen highlighted the importance of monitoring altcoins’ performance against Bitcoin (BTC) as a key indicator of a potential market downturn amidst looming recession pressures. The analyst suggested that the performance of altcoins against Bitcoin throughout April could signal the beginning of a market-wide decline, especially if a crash occurs in these altcoin/BTC trading pairs.
Cowen stated that it is crucial to determine the market sentiment represented by altcoins, which currently reflect the average individual investor’s approach to the market. According to the analyst, a failure to maintain stability in the altcoin/BTC trading pairs could be a sign that the Fed may have gone too far.
At the center of the analyst’s analysis is the TOTAL3 chart, which serves as an indicator for the overall altcoin market, and the Bitcoin chart. The TOTAL3 chart tracks the value of the altcoin market excluding Bitcoin, Ethereum (ETH), and stablecoins. Currently, the TOTAL3 chart is at a level of 753.10 billion dollars, and Cowen pointed out that this chart must be closely monitored for potential signs of a downturn.
Analyst Suggests Significant Rise in BTC.D Possible
Furthermore, the analyst warned that if interest rate cuts are postponed from June to July, contrary to many expectations, Bitcoin’s dominance in the crypto market (BTC.D) could rise, as historical patterns have shown. In a bearish market scenario, an increase in BTC.D would mean that altcoins are losing value faster compared to Bitcoin.
Cowen’s view is that the postponement of the Fed’s rate cut reflects patterns observed in previous market cycles, corresponding to a prolonged downturn in altcoins. At the heart of this view are historical examples where BTC.D rose until the rate cut and even continued to rise after the cut. According to Cowen, the trigger for this trend will be Bitcoin gaining ground in an uncertain monetary policy environment while altcoins lose footing.
