A widely followed crypto analyst is issuing a warning to investors, saying that a deep correction in the altcoin markets may be on the horizon.
In a new video update, prominent crypto strategist Benjamin Cowen tells his 783,000 YouTube subscribers that history is signaling a massive downswing for altcoins.
[adinserter block="1"]According to Cowen, the Bitcoin dominance (BTC.D) chart currently looks strong and historical data suggests that it will continue to be bullish as Bitcoin (BTC) inches closer to its halving event next year.
The Bitcoin dominance index tracks how much of the total crypto market capitalization belongs to Bitcoin. A bullish BTC.D chart suggests that Bitcoin is taking a larger share of the crypto markets at the expense of altcoins.
Says Cowen,
“I think fundamentally the dominance is very bullish and if the dominance is bullish, it’s not a good thing for altcoins on their Bitcoin pairs.
And if the dominance is bullish in the pre-halving year, then it tends to not be a good thing for altcoins on their USD pairs as well. That’s what history tells us. It doesn’t mean that it has to happen but that’s just what history tells us.”
Cowen goes on to say that the crypto king’s dominance level breaking above 49% would be a “risk-off” signal and that BTC’s dominance level could rise even if Bitcoin’s price dips.
“We could hold the line, and we could get another push higher, but if it happens then what I would say is don’t look so closely at the price, just look to see when the dominance breaks 49% in a sustained way, and that would to me be the risk-off signal.
And you could still see the dominance break 49% in a Bitcoin downtrend. I mean don’t forget [the May-June dominance rally in 2022]. What was going on in the market then? Bitcoin was going down [in price] and the dominance was going up.”
Cowen goes on to say he that believes capital will likely rotate from altcoins into Bitcoin even though the process could take time.
“You can see the altcoin bleeding back to Bitcoin. It’s clear as day… It’s happening. It’s just a very slow process…
The altcoin market is likely just going to bleed back to Bitcoin for quite a long period of time, and that’s why it’s worthwhile to put on your (Bitcoin) maxi hat during that time until you see the altcoin market get wrecked on their Bitcoin pairs, the dominance well above the range high and only then does it make sense, in my opinion, to seriously consider the altcoin market.”
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