Crypto analyst Benjamin Cowen has expressed caution about the potential downside of the digital asset market this quarter if the Federal Reserve begins to cut interest rates.
Cowan emphasized the importance of the presentation of the altcoins vs. Bitcoin (BTC) as a key indicator of market correction under recessionary pressures. He suggests that the collapse of altcoin-BTC pairs in April could signal the start of a summer correction. Conversely, if altcoin pairs remain resilient, a correction may be less likely or occur later, possibly in May.
Cowen closely monitors the chart of TOTAL3 against Bitcoin, which serves as an indicator of the movement of the entire altcoin market, excluding major cryptocurrencies such as Bitcoin, Ethereum (ETH) and stablecoins. TOTAL3 currently stands at $721 billion at the time of writing (April 10).
The analyst also speculated on the potential impact of the interest rate cut, suggesting that if it is delayed until July instead of June, Bitcoin’s (BTC.D) dominant position in the crypto markets could continue to increase following historical trends.
In a bearish market scenario, an increase in BTC.D suggests that altcoins are depreciating faster relative to Bitcoin.
Cowen also highlighted the correlation between the timing of interest rate cuts and Bitcoin’s dominant position during previous market cycles. He suggests that if rate cuts are delayed further, altcoins are likely to suffer losses against Bitcoin, similar to previous cycles where dominance increased by the time of rate cuts. Thus, the postponement of interest rate cuts could amplify the decline of altcoins against BTC.
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