In a recent analysis, trader Benjamin Cowen highlights Bitcoin's exceptional achievements amid market volatility and connects it to U.S. monetary policy.
Why Are Altcoin/Bitcoin Pairs Struggling?
Cowen found that altcoin/Bitcoin pairs are experiencing stagnation. He cautioned that this phase of stability may precede further downturns, stating, "Altcoin/Bitcoin pairs are currently stable, but similar declining trends are expected in the coming weeks." Diminishing short-term profit prospects are leading to declining volumes in altcoin trading, prompting more conservative investors to shift towards Bitcoin, especially during market downturns.
How Does Monetary Policy Favor Bitcoin?
Cowen attributes Bitcoin's enduring strength primarily to the U.S. Federal Reserve's monetary tightening. High-interest rates and ongoing quantitative tightening are pushing investors towards assets with limited supply, such as Bitcoin. He noted, "The fundamental assumption is that Bitcoin's dominance will increase until quantitative tightening ends."
Could Bitcoin Reach New Heights?
Cowen's observations suggest that Bitcoin is expected not only to excel in pricing but also in overall market dominance. Currently trading around $84,270, Bitcoin continues to demonstrate resilience against major cryptocurrencies. Cowen also highlighted existing uncertainties in the U.S. economy influencing market dynamics. Concerns about a possible recession and ambiguous timelines for interest rate adjustments are making investors adopt a more cautious stance. Bitcoin's limited supply and historical stability during turbulent times are seen as advantages in the current climate.
Market behavior is likely to remain influenced by Federal Reserve signals. Without clear indications regarding a shift in monetary policy, Bitcoin is expected to maintain its upper hand over altcoins, solidifying its importance in investment strategies for the foreseeable future.
