Opinion: What will be the next trend in the cryptocurrency market? The dominance of BTC and ETH will strengthen

Author: Crypto, Distilled

Compiled by: Felix, PANews

What is the next trend in the crypto market? The market is like a battlefield. The gap between bear and bull markets will only widen. Crypto analyst Benjamin Cowen has made predictions about the future of the crypto market, believing that the dominance of BTC and ETH will strengthen, and the trend of altcoins against Bitcoin (ALT/BTC) will be similar to that of the summer of 2019.

Key Points:

• BTC dominance is overall on an upward trend
• Blue-chip dominance will further increase
• ETH/BNB/TON are rising against the trend
• The impact of ETH spot ETF may be exaggerated
• Once market attention bottoms out, altcoins will bottom out

Impact of ETF on Bitcoin:

Many investors are confused by the surge in ETF holdings while Bitcoin's performance is poor. Ben believes that the scale of the crypto market is far greater than the flow of ETFs. There are also many overlooked sources of liquidity, such as whale old players.

Why the Obsession with ETFs?

The enthusiasm for ETFs largely stems from personal biases. Ironically, supporters of "no keys, no coins; keys and coins are one" are also pushing for ETFs. This inconsistency reveals a key force at work: the greater fool theory (Note: the greater fool theory refers to the idea that the price of an asset is determined by people's expectations).

Altcoin Outlook: What are the Future Trends?

The altcoin market is at a critical support level. A downward breakout is expected, which may trigger further declines.

Ben's viewpoint is based on the fact that most ALT/BTC tend to oscillate.

Why Bearish on Altcoins?

Ben's pessimistic view focuses on market attention. Altcoins thrive due to attention, shaping their narratives and price trends. The current social risk indicator (Total Social Risk) is unusually low at 0.02/1, indicating minimal retail interest.

When Will ALT/BTC Bottom Out?

Once the social risk indicator reaches a lower low, ALT/BTC may bottom out. The current market situation is similar to that before the Fed's interest rate cuts in the summer of 2019. Social interest rebounded before the halving in both 2019 and 2024, but then declined again.

Advance Decline Index (ADI):

A way to visualize altcoin capitalization is through the ADI. The ADI is an indicator compiled based on the ratio of the number of tokens that rise to those that fall daily, reflecting the overall market trend. Recent market conditions indicate that there are more falling altcoins than rising ones. Do not go against the trend.

BTC---The Calm in the Storm

While Ben is bearish on most altcoins, BTC shows some resilience. Additionally, Ben emphasizes the relative strength of ETH, BNB, and UNI.

Ben does not elaborate on why ETH and UNI are strong. A reasonable explanation could be the resilience of DeFi. Some strong signs have emerged despite the overall market weakness.

Weak Total3

The Total3 indicator (the total market capitalization of all cryptocurrencies excluding BTC and ETH) remains below its 20-week moving average.

This does not mean that altcoins have perished, but selective investment is crucial.

Small Cap vs Large Cap:

Another interesting perspective is OTHER - Total3 / OTHERs. This compares low market cap altcoins with high market cap altcoins.

Recently, higher market cap altcoins have significantly outperformed other tokens. Ben expects that, similar to mid-2022, low market cap altcoins may see further declines.

Will Bitcoin's Dominance Peak Soon?

BTC's dominance has not yet peaked. This is because Bitcoin has not broken below its 20-week moving average. Bitcoin remains stable between $60,000 and $70,000, while other tokens have declined.

BTC Dominance Overall on an Upward Trend:

A significant feature of this cycle is that altcoins have not experienced a widespread rally. The result is that BTC dominance is overall on an upward trend.

Blue-Chip Tokens Dominate:

This trend also extends to the dominance of blue-chip tokens: the dominance of BTC and ETH is rising.

This figure is expected to approach 73%, and may even reach an upper limit of 80%. Recent market data is around 73%, having entered the upper range.

BTC Dominance (Excluding ETH):

The recent decline in BTC dominance is entirely due to the hype surrounding the ETH spot ETF. Excluding ETH, BTC's dominance remains strong.

ETH/BTC Outlook:

The hype surrounding the spot ETF may temporarily boost ETH. However, ETH/BTC is expected to trend downward in the long term. This is because U.S. monetary policy has not changed, even though Bitcoin has performed well during difficult times.

When Will ETH/BTC Bottom Out?

ETH/BTC may bottom out after the Fed's interest rate cuts or the end of quantitative tightening, but these events have not yet occurred.

In the context of restrictive monetary policy, BTC's performance may exceed that of ETH.

Conditions for Prediction Failure?

Ben is open to the possibility of ETH performing well. Particularly, if ETH/BTC remains above the bull market range in July. It is worth mentioning that Ben did not predict the surge in ETH prices at the end of May. Therefore, this prediction may be wrong again.

It is important to note that in the crypto space, pessimistic views are often more easily rationalized than optimistic ones. However, it is crucial not to forget the irrational nature of the market. Strong reflexivity can trigger massive price fluctuations in an instant.

Note: Reflexivity refers to the process where rising prices attract buyers, who further push prices up until the process becomes unsustainable. The same process can occur in reverse, leading to catastrophic price declines.