Benjamin Cowen, in his recent video, delves deep into the cyclical nature of Bitcoin and the broader cryptocurrency market. The CoinSpeech team has collected the most important takeaways from his recent appearance. You can find Benjamin Cowen’s new video below.
Market Valuation and Cycles
Cowen highlights that as of June 1, 2024, the total market cap of the entire cryptocurrency asset class is approximately $2.528 trillion, with the fair value at $2.637 trillion. This indicates a slight undervaluation of 4.14%. He explains, “the total market cap of the asset class goes through periods of overvaluation and undervaluation because the markets we go into bubble phases and then we go into sort of you know depression phases where no one want to touch crypto.”
Bitcoin’s Dominance Over Altcoins
One of the significant trends observed over the past few years is the capital rotation from altcoins back to Bitcoin. Cowen points out, “Bitcoin is at essentially all-time highs or really close to all-time highs, whereas a lot of the other cryptocurrencies are nowhere close.” He emphasizes that throughout different phases of the market cycle, Bitcoin tends to reclaim significant market share from altcoins, especially until the market witnesses looser monetary policies.
Historical Patterns and Future Prospects
According to Cowen, analyzing historical cycles reveals a pattern: post-halving and pre-halving years exhibit varied behaviors. For instance, he mentions from the past cycles, “Last cycle sort of the durable rally that took us into full-blown bubble mode did not occur until the very end of the having year early part of the post having year.” This analysis suggests that the price behavior closely follows cyclical events like halving or rate cuts.
Potential Left Translated Peak
Another critical point Cowen discusses is the possibility of a ‘left translated cycle peak,’ wherein the cycle peak might occur sooner than historically expected. He states, “the peak occurs this year and that’s possible, right that’s certainly possible and we’ve even talked about that outcome… I think that outcome is going to be sort of more so solidified based on what actually happens this summer.”
Impact of Monetary Policy
The influence of monetary policy on cryptocurrency markets cannot be ignored. Cowen discusses how rate cuts have historically impacted Bitcoin and the broader market. He notes, “It ultimately comes down to whether you know rate cuts usher in sort of the cool-off period, um or not and that I think should help help you know help us or give us at least more insight into the nature of the cycle.”
Staying Bitcoin-Heavy
Cowen’s concluding advice is: “I think Bitcoin heavy makes more sense than altcoin heavy.” This strategy, according to him, has proven beneficial in past cycles and is likely to be so until the arrival of looser monetary policies.