Popular crypto analyst Benjamin Cowen says the historical performance of Bitcoin (BTC) suggests that investing in altcoins right now remains risky.
In a new strategy session, Cowen tells his 729,000 YouTube subscribers that the price movement of Bitcoin in 2018 hints at what would happen to the altcoins market if the benchmark cryptocurrency continues to slide.
[adinserter block="1"]“We need to look at what has happened in the past and say if we put in a lower low, what happens? The altcoin market against the Bitcoin market changes. The best way to understand that is by looking at Bitcoin dominance [the ratio between the market cap of Bitcoin to the rest of the cryptocurrency markets].
The dominance right now is at the exact same level it was at in June of 2018, the exact same level and then the dominance shot up… What happened in June of 2018? That’s where Bitcoin puts in a lower low.”
Cowen says that altcoin valuations can fundamentally change if Bitcoin puts in a lower low, which he says is likely to happen.
“We don’t know yet if Bitcoin’s gonna put in a lower low but I would say there is a risk of it happening, a very high risk of it happening. If Bitcoin puts in a lower low, the structure of the market changes completely. The reason is because the bulls can no longer hold on to the thesis that it is still a bull market because we’re putting in higher lows.
Then the bulls have to give some ground and say it’s just a long sideways phase. Again, they could be right and it could play out to be like that, but at least the argument of it being a bull market could be over in the short term.”
Cowen points to the parallel in the performance of Bitcoin now and in 2018, which lays out the potential outlook of BTC and the altcoins market.
“If we, in fact, end up putting in a lower low, then we have to go back down and test the bottom of this range just like we had to go back down and test the bottom of the $6k range back in 2018. The way to think about it is the $30k range is a similar type range as your $6k range in 2018.
Over here, the range that we kept going down to was $6k, but over here, you could argue that it’s closer to $30k, basically that same range more or less. You have $6k and $30k. The floor from here to here has gone up 5x, but the structure is still somewhat similar.”
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