The post Crypto Correction Looming? Examining the Role of Economic Indicators and Fed Policy appeared first on Coinpedia Fintech News
A prominent crypto analyst, Benjamin Cowen, is closely observing the potential impact of Fed rate cuts and upcoming economic data releases on the digital asset market, particularly Bitcoin and altcoins. He suggests the market could see a correction in the second quarter if the Federal Reserve initiates rate cuts in response to economic indicators, such as the March CPI and FOMC minutes scheduled this week. Looking at the market sentiments, analysts warn that a bigger correction is looming, troubling altcoins.
Let’s dive in.
Fed Rate Cuts To Trigger a Correction?
As Cowen explains, if altcoins (shown by the alt/Bitcoin pairs) start to lose value against Bitcoin, it could mean that recessionary pressures are rising. Altcoins may lose value compared to Bitcoin if this happens. When looking at the power of the altcoin market, he says it’s important to keep an eye on the TOTAL3 versus Bitcoin pair, which shows the market capitalization of all digital assets besides Bitcoin, Ethereum, and stablecoins.
In addition to the economic factors, Cowen highlights the significance of the upcoming Bitcoin halving, which will reduce the block reward and decrease the yearly inflation rate. Despite the reduced emission rate, Cowen suggests that high miner revenue, driven by Bitcoin’s price appreciation, will maintain miners’ profitability and ensure the network’s security remains robust.
Also Read : Ripple’s USD-Backed Stablecoin Set to Shake Up Tether’s Dominance
Altcoins Falling: Test of Crypto Conviction?
Furthermore, Cowen discusses the potential impact of the timing of rate cuts on Bitcoin dominance (BTC.D), which measures Bitcoin’s share of the overall crypto market. He notes that a delay in rate cuts until July could lead to a continued increase in Bitcoin dominance, signaling a bearish trend for altcoins.
Future Outlook
Overall, in a bull market, prices generally rise, driven mainly by Bitcoin. Corrections happen, but they’re typically not severe, around 20% or less. Currently, Bitcoin’s correction is around 17.5%, indicating it still has room to grow. If Bitcoin goes up, so do altcoins. Selling now could be a costly mistake if the bull market continues its upward trend.
To hold or sell what will be your strategy in the bull market?
