Bitcoin Dominance Expected to Rise as Fed Tightens, Says Analyst

Analyst and trader Benjamin Cowen has asserted that Bitcoin (BTC) is set to continue outperforming altcoins. In a recent strategy session, Cowen shared his views with his 892,000 YouTube subscribers, indicating that the total market cap of altcoins, excluding Bitcoin and Ethereum, is likely to continue declining when compared to Bitcoin. This metric, referred to as Total3, is a crucial indicator for Cowen in evaluating Bitcoin's performance relative to other cryptocurrencies.

Cowen's analysis suggests that altcoin/Bitcoin pairs are currently stable but are expected to drop over the next few weeks, mirroring the trend from last year. He attributes this anticipated decline to the ongoing quantitative tightening by the Federal Reserve, which he believes will continue to bolster Bitcoin's market dominance. According to Cowen, Bitcoin dominance, which measures the ratio of Bitcoin's market capitalization to that of all other crypto assets, is likely to rise until the Federal Reserve concludes its quantitative tightening policy.

Cowen's optimistic outlook on Bitcoin dominance is based on the current monetary policy environment, which he believes favors Bitcoin. He notes that if the Federal Reserve were to end quantitative tightening at the next Federal Open Market Committee (FOMC) meeting, his perspective on Bitcoin's dominance could shift. However, he acknowledges that the timeline for the end of quantitative tightening is uncertain and could potentially occur this summer.

The analyst's forecast is rooted in the understanding that a rising Bitcoin dominance indicates that Bitcoin is either rising faster relative to other crypto assets or its decline is relatively muted compared to the rest of the digital asset market. This dynamic is crucial for investors to consider, as it suggests that Bitcoin may continue to outperform altcoins until broader economic conditions change.

Cowen's analysis offers a clear perspective on the current state of the cryptocurrency market and the factors influencing Bitcoin's performance. His insights underscore the importance of monitoring monetary policy and its impact on the relative performance of different crypto assets. As the market continues to evolve, investors will need to stay informed about these dynamics to make well-informed decisions.