Crypto analyst Benjamin Cowen, closely followed by the crypto community, has warned that decentralized finance (DeFi) and the altcoin market could soon face a major collapse. Cowen’s prediction is based on the belief that the decline in Bitcoin‘s (BTC) price will drag down altcoins and increase its dominance over the market.
Bulls and Bears Will Suffer
Speaking on Scott Melker’s “The Wolf of all street” podcast, Cowen stated that Bitcoin is likely to give back the gains it made in the first half of the year, causing a decline in DeFi altcoins and other altcoins. Cowen reminded listeners that the halving event in the past has affected both bulls and bears due to Bitcoin’s tendency to rise in value in the first half of the year and fall in the second half:
There is a lot of liquidity bubbling in the DeFi market, and it doesn’t take much for trust to be lost and for a black swan event to occur. Bitcoin started to rise in the first half of the year. If you look at the monthly value increases in previous years before the halving event, such as 2011, 2015, and 2019, you can see that in approximately half of those years, Bitcoin went up, and in the other half, it went down.
So we spent about six months in the red and six months in the green. In the year leading up to the halving event in 2024, the first five months were green. The same thing happened in 2019, with the first five out of six months being green. In 2011, the first five out of six months were green, but both 2019 and 2011 saw the next six months turn red. I’m going back to the idea that it should destroy both bulls and bears right before the halving event, and that’s how everyone gets wrecked enough.
Increase in Bitcoin Dominance Will Result in Crushing Altcoins
Cowen also warned that as Bitcoin’s dominance increases, the altcoin market struggles. The analyst believes that Bitcoin’s value will decrease and, at the same time, its dominance will deprive the altcoin market of more liquidity. He stated:
The altcoin market has been struggling throughout the year. That’s really what happened, and Bitcoin significantly outperformed them, but the problem is that altcoins struggled against Bitcoin doubling its value. So what happens to altcoins if Bitcoin retraces any part of this move? I think that’s the biggest issue here, and it’s the most brutal part of the cycle because as the Bitcoin/USD pair drops, Bitcoin’s dominance increases, and a lot of people haven’t experienced this part yet, but I think it’s approaching rapidly.
According to CoinMarketCap, Bitcoin’s dominance over the market is currently at 49.1%. This means that almost half of the total market value, which is $1.15 trillion, is allocated to the largest cryptocurrency.
