Altcoins may be in for a tough year. Crypto analyst Benjamin Cowen has raised concerns about the performance of altcoins for the remainder of 2023, citing historical patterns as a basis for his predictions.
In a recent YouTube session, Cowen expressed his belief that altcoins are likely to struggle in the coming months, echoing a common trend observed in pre-halving years.
Cowen’s outlook is tied to the impending Bitcoin (BTC) halving, scheduled for April 2024. The term “halving” refers to an event within the Bitcoin network when miner rewards are reduced by half.
The Halving Effect And Its Implications
Halving events usually occur approximately every four years and have significant implications for the cryptocurrency market. The reduction in miner rewards can lead to decreased supply, potentially driving up the price of Bitcoin due to increased scarcity.
“The point is that regardless of what the S&P does, there’s a good chance that crypto, especially the altcoin market, is going to be struggling for the rest of the year, which is pretty common in pre-halving years for altcoins to really struggle, especially for the last half of it,” Cowen said. “So just be aware that this is pretty normal. Even outside of recessions or recession scares, it’s not that uncommon to see this type of behavior.”
The USD Golden Cross And Its Implications For Crypto
Cowen also highlighted a significant development in the traditional financial markets: the U.S. Dollar Index (DXY) forming a golden cross on its chart.
A golden cross occurs when a short-term moving average crosses above a long-term moving average on an asset’s price chart. This technical pattern is often associated with a significant uptrend in the asset’s value.
#DXY just got a golden cross.
Perhaps a correction sometime in the next week or two, finding support at the 50D SMA, then a potential continuation of the trend higher. pic.twitter.com/MPLRXSkL6r
— Benjamin Cowen (@intocryptoverse) September 21, 2023
Cowen’s observation raises the possibility of the US dollar gaining strength in the near future, which could have far-reaching consequences for various financial assets, including cryptocurrencies.
A stronger dollar could lead to increased interest in traditional assets and a potential decrease in the appeal of cryptocurrencies as alternative investments.
Impact On Altcoins And Bitcoin’s Dominance
One critical insight from Cowen’s analysis is the potential impact on altcoins. He believes that Bitcoin’s dominance in the cryptocurrency market is likely to continue growing, even during this period of adjustment.
As of today, the market cap of cryptocurrencies stood at $1.03 trillion. Chart: TradingView.com
This shift could result in a concentration of liquidity in Bitcoin, leaving altcoins vulnerable to decreased investor interest.
Cowen’s analysis suggests that altcoins may face a challenging period for the remainder of 2023, driven by historical trends, the upcoming Bitcoin halving, and developments in the US dollar market.
Investors and enthusiasts in the cryptocurrency space will need to closely monitor these factors as they navigate the evolving landscape of digital assets.
Featured image from GoCorps
Credit: Source link