Top crypto analyst Benjamin Cowen says historical precedent makes it likely that Bitcoin’s (BTC) latest rally will lead to a dramatic correction before the real bull market takes off.
In a new interview with Crypto Banter, Cowen says the reason Bitcoin is rising right now is not because new capital is entering the space and prices are rising.
Instead, the analyst argues that Bitcoin is rising because traders are converting their altcoins, which are further out on the risk curve, into BTC. Cowen says altcoin liquidity will eventually dry up and Bitcoin will no longer have buying pressure to continue its rally.
The closely followed analyst says he expects BTC will eventually be rejected at one of its nearby resistance levels before selling off and bringing altcoins with it.
“Bitco usually has a pretty significant sell-off sometime before the halving. I mean, maybe it will happen after the halving, I don’t know.
But the reason this is happening, in my opinion, is because liquidity is gone. So I think the reason Bitcoin is rising right now is not because there is new money coming into the space, because if there was new money coming into the space… wouldn’t the total market cap have been higher?
The total market capitalization has therefore remained the same. The reason Bitcoin is rising is because people are converting their altcoins into Bitcoin, and therefore Bitcoin’s dominance is increasing. But the problem is that at some point all that liquidity in the altcoin market is used up, so there is simply no more liquidity in altcoins to buy Bitcoin.
And then when that happens, when Bitcoin enters a risky environment again, and all that previous money that was in the altcoin market and was there to pick up ‘cheap Bitcoin’, that money is gone and there is no longer a bid . .
There’s no longer any bidding on Bitcoin and then Bitcoin drops, it crushes the altcoin market, and then after that last drop in Bitcoin, you would actually start using altcoins to outperform over the next three to six months. But right now we are still in the phase where alts are moving to Bitcoin, and at some point we will turn around and Bitocin will crush the altcoin market.”
At the time of writing, BTC is trading at $30,734
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