Cowen tells his 754,600 Twitter followers that the peer-to-peer payments network will likely decline in price after Wednesday’s halving event when miners’ rewards were cut in half.
“As mentioned a month ago, LTC tends to peak in June/July of its halving year and then fade into the halving. Following the halving, history shows you should temper your expectations on LTC until the post-halving year (2025).”
According to his chart, Litecoin historically rallies two months prior to a halving event then goes on about a year-long decline before rallying in the subsequent year.
Litecoin is trading for $87.46 at time of writing, down 6.8% in the last 24 hours.
Looking at Bitcoin, Cowen believes that an outflow of altcoin market liquidity into BTC is sustaining Bitcoin’s rally as indicated by the declining total market cap of altcoins (TOTAL3).
“BTC is up while altcoins are down. This goes along with the theory that the BTC rally is primarily fueled by the conversion of alts to BTC. Historically, in the pre-halving year, we reach a turning point where alt liquidity is no longer sufficient for BTC to continue the rally.”
According to Cowen, both the TOTAL3 market cap decline and an increase in Bitcoin’s dominance (BTC.D) support his thesis.
“Total crypto market capitalization color-coded by BTC risk, which depends on price, on-chain, and social metrics. Total market cap has gone sideways for the last year because while BTC went up, most altcoins went down. During that period, BTC dominance went from 39% to 49%.”
Cowen warns of a Bitcoin market correction based on historical price action during pre-halving years.
“During the last three pre-halving years, Bitcoin fell below its bull market support band in August/September…
No guarantee it happens this time, but certainly a strong possibility.”
He notes an August Bitcoin dip is also supported by the historical average return on investment (ROI) for pre-halving years, which in July matched pretty closely to other Julys. If August plays out similarly, Bitcoin could be looking at an ROI of more than -20%, according to Cowen.
“As I previously mentioned, the ROI of Bitcoin in July of the pre-halving years was -4.74%. The return of BTC in July 2023 ended up being -4.09%. FWIW (for what it’s worth), the average return of BTC in August of its pre-halving years is -21.3%.”
Bitcoin is trading for $29,187 at time of writing, down 1.8% in the last 24 hours.Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
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