Opinion: What’s next for the crypto market? The dominance of BTC and ETH will strengthen
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Opinion: What’s next for the crypto market? The dominance of BTC and ETH will strengthen
The impact of ETH spot ETFs may be overstated.
Navigating Web3 tides with focused insightsAuthor: Crypto, Distilled
Translation: Felix, PANews
What's next for the crypto market? The market is a battlefield. The gap between bear and bull markets will only widen further. Crypto analyst Benjamin Cowen has made predictions about the future of the crypto market, suggesting that BTC and ETH dominance will strengthen, and the performance of altcoins against Bitcoin (ALT/BTC) may resemble the summer of 2019.
Key Points:
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BTC dominance is on an overall upward trend
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Blue-chip dominance will continue to rise
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ETH/BNB/TON are rising against the broader downtrend
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The impact of ETH spot ETFs may be overstated
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Once market attention hits bottom, altcoins will follow
The Impact of ETFs on Bitcoin:
Many investors are puzzled by the surge in ETF holdings despite lackluster Bitcoin price action. Ben believes the crypto market is far larger than ETF flows alone. There are many overlooked sources of liquidity, such as veteran whales.
Why the Obsession with ETFs?
The enthusiasm around ETFs stems largely from personal bias. Ironically, even supporters of "not your keys, not your coins" are now pushing for ETFs. This inconsistency reveals a key force at play: the greater fool theory (note: the greater fool theory suggests asset prices are driven by expectations rather than fundamentals).
Altcoin Outlook: What Lies Ahead?
The altcoin market is at a critical support level. A downside breakout is expected, potentially triggering further declines.
Ben’s view is based on the observation that most ALT/BTC pairs are trending sideways.
Why Bearish on Altcoins?
Ben’s pessimism centers on market attention. Altcoins thrive on visibility, which shapes their narratives and price movements. Current social risk indicators (Total Social Risk) are abnormally low at 0.02/1, indicating minimal retail interest.
When Will ALT/BTC Bottom?
ALT/BTC could bottom once the social risk indicator reaches a lower extreme. The current market resembles the period before the Fed rate cuts in summer 2019. In both 2019 and 2024, social interest rebounded ahead of the halving but declined afterward.
Advance-Decline Index (ADI):
One way to visualize altcoin capitalization is through the ADI. The ADI measures the ratio of daily rising tokens to declining ones, reflecting overall market trends. Recent data shows more altcoins are falling than rising. Don’t fight the trend.
BTC — Calm Amid the Storm
While Ben is bearish on most altcoins, BTC shows resilience. He also highlights the relative strength of ETH, BNB, and UNI.
Ben does not elaborate on why ETH and UNI remain strong. A plausible reason could be DeFi resilience. Despite broad market weakness, there are emerging signs of strength.
Weak Total3
The Total3 metric (total market cap of all cryptocurrencies except BTC and ETH) remains below its 20-week moving average.
This doesn't mean altcoins are dead, but selective investing is crucial.
Small-Cap vs Large-Cap:
Another interesting perspective is OTHER - Total3 / OTHERs, comparing low-market-cap altcoins to high-market-cap ones.
Recently, higher-market-cap altcoins have clearly outperformed others. Ben expects, similar to mid-2022, further declines in low-market-cap altcoins.
Will Bitcoin Dominance Peak Soon?
Bitcoin dominance has not yet peaked. This is because Bitcoin has not broken below its 20-week moving average. BTC remains stable between $60K and $70K while other tokens decline.
BTC Dominance Is Rising Overall:
A defining feature of this cycle is the absence of broad altcoin rallies. As a result, BTC dominance is on a clear upward trajectory.
Blue-Chip Tokens Lead the Way:
This trend extends to blue-chip token dominance: both BTC and ETH are gaining share.
This figure is expected to approach 73%, possibly even reaching an upper bound of 80%. Current market data is already around 73%, near the top of the range.
BTC Dominance (Excluding ETH):
The recent dip in BTC dominance is entirely due to speculation around ETH spot ETFs. Excluding ETH, BTC dominance remains strong.
ETH/BTC Outlook:
Speculation around spot ETFs may temporarily boost ETH. However, ETH/BTC is expected to trend downward over the long term. This is because U.S. monetary policy remains unchanged, even though Bitcoin performs well during times of stress.
When Will ETH/BTC Bottom?
ETH/BTC may bottom after the Fed begins rate cuts or ends quantitative tightening—but these events have not yet occurred.
Under restrictive monetary policy, BTC is likely to outperform ETH.
Conditions That Could Invalidate the Forecast?
Ben remains open to the possibility of ETH outperforming. Notably, if ETH/BTC stays above the bullish zone in July. It’s worth remembering that Ben did not predict ETH’s price surge at the end of May—so this forecast could also be wrong.
It's important to note that in crypto, bearish views are often easier to rationalize than bullish ones. Yet, one must never forget the market’s inherent irrationality. Strong reflexivity can trigger massive price swings in an instant.
PANews Note: Reflexivity refers to rising prices attracting buyers, whose buying further drives up prices until the cycle becomes unsustainable. The same process can work in reverse, leading to catastrophic price collapses.
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