The Cryptocurrency analyst Benjamin Cowen offered a nuanced perspective on the recent performance and potential future trajectory of Solarium (CRYPTO:SOL), urging caution amid the Altcoin’s impressive rally.
What happened
In his latest podcast report, Cowen acknowledged that he was correct in predicting Solana would fall below $10 in 2022, but admits that he did not anticipate its subsequent 500% rise against Bitcoin (CRYPTO:BTC). He attributes this to his focus on Bitcoin’s dominance, which he expected to rise from 38% to 60% before altcoins overtook him. Data from Coinmarketcap shows that Bitcoin’s dominance is currently at 56%.
While Solana has seen a significant rally, Cowen noted that it has not hit new all-time highs against Bitcoin, unlike what some altcoins have done in previous cycles.
He drew parallels between Solana’s current pattern and the behavior of Ethereum (CRYPTO:ETH) in previous market cycles, suggesting that Solana could follow a similar consolidation and correction path.
Cowen highlighted the importance of considering market cap valuations rather than just price, noting that Solana’s market cap relative to Bitcoin is near its 2021 high. He speculated that macroeconomic factors, particularly the inversion of the yield curve, could trigger a pullback in the valuation of Bitcoin and Solana.
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Why is it important?
Cowen suggested that Solana’s performance could depend on broader market dynamics, including Ethereum’s potential bottoming against Bitcoin and changes in the Federal Reserve’s monetary policy.
He argues that most altcoins historically act as oscillators against Bitcoin, warning that rate cuts could lead to a breakup in altcoin/Bitcoin pairs.
While acknowledging Solana’s strong performance, Cowen urges investors to be mindful of potential market swings and the cyclical nature of altcoin performance relative to Bitcoin.
What’s coming
Bitcoin’s influence as an institutional asset class is expected to be explored in depth at Benzinga’s upcoming Future of Digital Assets event on November 19.
Image: Shutterstock
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