The world of cryptocurrencies is highly volatile. Not only are altcoins subject to market forces, but they are also subject to regulatory changes. This means that while altcoins may occasionally outperform Bitcoin, they are unlikely to do so in the long term due to regulatory uncertainty. This is the view being expressed by crypto analyst Benjamin Cowen.
In a recent video update, Cowen cautioned investors that it would be unwise to assume that the altcoin market would follow Bitcoin just because it happened in 2021. He pointed out that there are examples to show that the altcoin market does not always follow Bitcoin after these rallies, which will likely lead to the devaluation of the altcoin market on their Bitcoin pairs.
Cowen’s analysis is largely based on the Bitcoin Dominance index (BTC.D). The BTC.D measures how much of the total crypto market capitalization belongs to the king crypto. Cowen believes that BTC.D will take out its critical resistance area citing uncertainty in the altcoin markets due to regulatory pressure. A bullish BTC.D chart suggests that Bitcoin is rising faster in value than altcoins or altcoins are losing value faster than BTC.
Cowen believes that the relative uncertainty of regulatory risk with regards to the altcoin market, not knowing if they are securities or not, and the recession risk that could materialize later this year or early next year, will likely result in altcoins not providing refuge during that time, but Bitcoin could provide relative refuge.
It is important to note that Bitcoin is trading for $27,594 at the time of writing. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency, or digital assets. It is recommended that you seek the advice of a professional financial advisor before investing.
Bitcoin has been the most dominant cryptocurrency since its inception. While it has faced significant volatility over the years, it has remained relatively stable compared to many of the altcoins that have come and gone. This stability is likely to continue, as Bitcoin is more widely accepted than any other cryptocurrency, and is viewed as the most secure and trustworthy.
Investors should also keep in mind that the cryptocurrency market is subject to a constantly evolving regulatory landscape. While some countries have begun to embrace cryptocurrencies, others have taken a more cautious approach. It is important to keep track of the regulatory changes in your jurisdiction, as these can have a significant impact on the value of your investments.
In recent years, Bitcoin has become increasingly mainstream, with more and more institutional investors beginning to invest in the cryptocurrency. This has helped to boost the perceived legitimacy of Bitcoin, and is likely to attract further investment in the future. As more investors embrace Bitcoin and other cryptocurrencies, it is likely that the regulatory landscape will become more favorable, further boosting the value of these assets.
In conclusion, while altcoins may occasionally outperform Bitcoin in the short term, regulatory uncertainty means that Bitcoin is likely to dominate other digital assets in the long term. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. It is recommended that you seek the advice of a professional financial advisor before investing. As always, investing in cryptocurrencies comes with significant risk, and investors should only invest what they can afford to lose.