Top crypto analyst Benjamin Cowen says that historical precedent makes it likely that Bitcoin’s (BTC) latest rally will lead to a dramatic correction before the real bull market kicks off.
In a new interview with Crypto Banter, Cowen says that the reason Bitcoin is currently rallying is not because new capital is coming into the space and raising prices.
Instead, the analyst argues that Bitcoin is going up because traders are converting their altcoins, which are further out the risk curve, into BTC. Cowen says that eventually, liquidity from altcoins will dry up, and Bitcoin will no longer have buy pressure to sustain its rally.
The closely followed analyst says he’s expecting BTC to eventually get rejected at one of its nearby resistance levels before selling off and bringing altcoins down with it.
“Bitcoin usually has a pretty significant sell-off sometime before the halving. I mean maybe it happens after the halving, I don’t know.
But the reason it happens, in my opinion, is because liquidity has gone. So I think the reason Bitcoin is going up right now, it’s not because new money is coming into the space, because if new money was coming into the space… wouldn’t the total market cap have gone higher?
So the total market cap has stayed the same. The reason Bitcoin is going up is because people are converting their altcoins to Bitcoin, and that’s why Bitcoin dominance is going up. But the issue is, at some point, all that liquidity in the altcoin market has been bled dry, so there’s just no liquidity left in altcoins to buy Bitcoin.
And then when that happens, when Bitcoin goes into a risk-off environment again, and all this prior money that was sitting in the altcoin market that was there to scoop up ‘cheap Bitcoin,’ that money is gone and there’s no longer a bid.
There’s no longer a bid for Bitcoin and then Bitcoin drops, it crushes the altcoin market, and then after that, after that final drop by Bitcoin, over the next three to six months you would actually altcoins to outperform. But right now we’re still in the phase where alts are bleeding to Bitcoin, and at some point, we roll over and Bitocin crushes the altcoin market.”
At time of writing, BTC is trading at $30,734
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