What’s next for the cryptocurrency market? Crypto analyst Benjamin Cowen has predicted the future of the crypto market, believing that the dominance of BTC and ETH will increase, and that the trend of Altcoin against Bitcoin (ALT/BTC) will be similar to the summer of 2019.
Main points
- BTC dominance overall is on an upward trend
- The dominance of blue chip stocks will further increase
- ETH/BNB/TON bucked the trend and rose
- The impact of ETH spot ETFs may be exaggerated
- Once market attention hits bottom, Altcoin hit bottom
Impact of ETFs on Bitcoin:
Many investors are confused by the surge in ETF holdings but the lackluster performance of Bitcoin. Ben believes that the size of the crypto market is much larger than the flow of ETFs. There are also many overlooked sources of liquidity, such as whale veterans.
Why are you so obsessed with ETFs?
Much of the enthusiasm for ETFs stems from personal bias. Ironically, supporters of "keyless means no currency, the currency key is one" are also promoting ETFs. This inconsistency reveals a key force at work: the Big Fool Theory.
Altcoin Outlook: What’s the Future?
The Altcoin market is holding on to critical support. A market breakout to the downside is expected, possibly triggering further pullbacks. Ben's point stems from this: Most ALT/BTC tends to be choppy.
Why are Altcoin bearish?
Ben's pessimistic view focuses market attention. Altcoin thrive on the attention they receive, shaping their narrative and price action. The current Social Risk indicator (Total Social Risk) is unusually low at 0.02/1, indicating minimal retail interest.
When will ALT/BTC bottom?
ALT/BTC may bottom once social risk indicators reach lower lows. Current market conditions are similar to those before the U.S. Federal Reserve cut interest rates in the summer of 2019. Social interest rebounded in both 2019 and 2024 before the halving, but then declined again.
Advance and Decline Index (ADI):
One way to visualize Altcoin capitalization is to use ADI. ADI is an indicator compiled based on the ratio of the number of rising coins to the number of falling coins every day, reflecting the overall trend of the market. Recent trends indicate that more Altcoin are falling than rising. Don't go against the trend.
BTC—the calm in the storm
While Ben is bearish on most Altcoin, BTC has some resilience. Additionally, Ben highlighted the relative strength of ETH, BNB, and UNI.
Ben did not elaborate on why ETH and UNI are strong. One legitimate reason could be DeFi's resilience. There are some signs of strength amid widespread market weakness.
Weak Total3
The Total3 indicator (the total market capitalization of all other cryptocurrencies except BTC and ETH) remains below its 20W moving average. This doesn’t mean Altcoin are dead, but selective investing is crucial.
Small cap vs large cap:
Another interesting point is OTHER – Total3/OTHERs. This is a comparison of low market cap Altcoin versus high market cap Altcoin.
Lately, higher market cap Altcoin have significantly outperformed other tokens in their returns. Ben predicts that low-cap Altcoin may see further declines similar to mid-2022.
Will Bitcoin’s dominance reach its peak soon?
BTC’s dominance has not yet reached its peak. This is because Bitcoin did not fall below its 20W moving average. Bitcoin remained stable between $60,000 and $70,000, while other coins declined.
BTC dominance is on the rise overall:
The notable feature of this cycle is the lack of widespread Altcoin gains. As a result, BTC dominance is on an overall upward trend.
Blue chip coins dominate:
This trend also extends to the dominance of blue-chip coins: BTC and ETH have seen their dominance rise.
This figure is expected to be close to 73%, and may even reach the upper limit of 80%. The recent market data is about 73%, which has entered the upper limit of the range.
BTC dominance (excluding ETH):
The recent decline in BTC dominance is entirely due to the ETH spot ETF hype. With the exception of ETH, BTC dominance remains strong.
ETH/BTC Outlook:
Spot ETF hype may temporarily boost ETH. However, ETH/BTC is expected to trend downward in the long term. This is because U.S. monetary policy has not changed, even though Bitcoin has performed well during difficult times.
When will ETH/BTC bottom out?
ETH/BTC may bottom after a rate cut by the US Federal Reserve or the end of quantitative tightening, but these events have not happened yet.
Against the backdrop of restrictive monetary policies, BTC may outperform ETH.
Predict failure conditions?
Ben is open to the possibility of ETH outperforming. ETH/BTC in particular remained above the bullish range in July. It is worth mentioning that Ben did not predict the surge in ETH prices at the end of May. So this prediction may be wrong again.
It’s worth noting that in the crypto space, pessimistic views are often easier to rationalize than optimistic ones. However, it is important not to forget the irrational nature of markets. Strong reflexivity can trigger huge price fluctuations in an instant.
PANews Note: Reflexivity means that rising prices attract buyers, who chase the price and further push up prices until the process becomes unsustainable. The same process can work in reverse, causing prices to fall to a catastrophic collapse.
