Prominent crypto analyst Benjamin Cowen has observed a significant shift in the cryptocurrency market, with Bitcoin (BTC) reaping the benefits as investors move away from altcoins.
Cowen shared these insights in a video update released yesterday, noting an increase in Bitcoin dominance as the crypto market navigates a period of uncertainty.
Cowen highlighted that even Ethereum (ETH), the second-largest cryptocurrency by market cap, is seeing a relative loss in value as investors reallocate funds to Bitcoin. He explained that the illiquid nature of the altcoin market is driving investors towards the relative safety of Bitcoin, causing its dominance to rise.
“The altcoin market is highly illiquid, and people are flocking to the relative safety of the blue chips, which sends the dominance of Bitcoin higher,” Cowen said. He further noted that as Bitcoin’s price increases, the altcoin market’s liquidity could no longer sustain it, leading to a potential downturn in altcoin values.
Cowen also pointed out that the current macroeconomic environment makes Bitcoin a more appealing choice than altcoins. Amid concerns about an inverted yield curve, high inflation, and a more hawkish Federal Reserve, investors are seeking the relative safety of Bitcoin, which Cowen refers to as the ‘blue chip’ within the crypto asset class.
“We essentially have this dynamic where this liquidity from the lower liquidity assets are seeking out the relative safety of the higher liquid assets,” Cowen explained. He added that while those outside the crypto space might scoff at calling Bitcoin a ‘blue chip,’ within the crypto asset class, Bitcoin holds that status.
As the crypto market continues to navigate uncertain times, Cowen’s analysis suggests that Bitcoin’s position as the ‘blue chip’ crypto could continue to strengthen.
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