The Federal Reserve’s Impact on Altcoins
A well-known crypto analyst suggests that the Federal Reserve will prioritize maintaining higher interest rates, which could impact altcoins until a significant event occurs. In a recent strategy session, Benjamin Cowen, a prominent crypto trader, explains that the Federal Reserve is unlikely to cut interest rates until the S&P 500 experiences a substantial corrective move.
Cowen believes that the Federal Reserve pays attention to the S&P 500’s performance. When the index drops significantly, it catches the Fed’s attention, prompting potential rate cuts. He speculates that the Fed will start cutting rates when the S&P 500 reaches levels around 3,500 or 3,400. Therefore, monitoring the S&P 500 can give insights into when altcoins might reverse their performance against Bitcoin.
Bitcoin Dominance and Altcoin Lag
Cowen predicts that as long as the stock market remains elevated, Bitcoin dominance (BTC.D) will continue to rise. BTC.D measures the percentage of total market capitalization held by Bitcoin. This rise in dominance causes many altcoins to underperform compared to Bitcoin.
Additionally, Cowen notes that historically BTC.D reverses its uptrend when the Federal Reserve initiates rate cuts. Until then, he anticipates that crypto investors will redirect their capital from altcoins to Bitcoin.
Current Market Status
At present, the S&P 500 sits at 4,117 while BTC.D stands at 54%.
Hot Take: Altcoin Rallies Hinge on Fed Action
The performance of altcoins may be closely tied to actions taken by the Federal Reserve. According to crypto analyst Benjamin Cowen, the Fed is unlikely to cut interest rates until the S&P 500 experiences a significant corrective move. This means that altcoin rallies may not occur until this event takes place. Cowen suggests monitoring the S&P 500 as an indicator for when altcoins might turn around against Bitcoin. Additionally, he points out that historically, Bitcoin dominance tends to reverse its uptrend when the Fed begins cutting rates. Until then, crypto investors may continue reallocating their capital from altcoins to Bitcoin.
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