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Analyst Predicts ETH to Plunge 50% Against BTC: The End for Altcoins?

Last Updated August 11, 2023 11:27 AM
Nikola Lazic
Last Updated August 11, 2023 11:27 AM

Key Takeaways

  • The altcoin market is facing a 40-50% drop
  • Benjamin Cowen predicts a drop in Ethereum price for the same 40-50% decrease against Bitcoin
  • The analysis is valid and highly likely

A popular macro investor and analyst behind Into the Cryptoverse  Benjamin Cowen was interviewed by Crypto Banted host Ran Neuner. Among topics like “Are altcoins coming back,” “Why is Bitcoin better than Ethereum?” and “Macro Economics & Fundamentals,” Cowen has stated that his analysis points out a potential 50% dip in Ethereum compared to Bitcoin (ETHBTC). 

It is worth delving deeper into this possibility and look into some of the other possibilities moving forward. 

Where Does This Target Come From? 

The first chart Benjamin uses is a ratio he developed in order to spot the altcoin market tops. The altcoin market cap (TOTAL3) minus USDT (deducting stablecoin) is divided by the BTC market cap. 

40-50% drop in the altcoins expected

 

As he states, when the ratio reached 1 it points out at the altcoin market tops, while it bottomed out at the 0.25 level. Measuring from its current level of 0.45 to its bottom area, there is a decrease potential of 44%. 

The first question is how valid is this ratio, and can it be trusted? While comparing the prices of some altcoins that were most successful in the previous cycle and some that were not so much, we can see that the ratio is accurate. 

altcoin cap to bitcoin ratio validity

On the chart above, we have inserted price charts of SOL, ADA, DOT, AVAX, DOGE, LINK, and MATIC. Aside from ADA, which is skewed to the left other altcoin tops match those of the ratio 1 mark interaction.

On the other hand, regarding bottoms, some of the compared altcoins were new to the market and there is no price history before July 2020. But December 28 was the lowest the ratio has been and from that point onward, we have seen bull market runups in these coins. 

This ratio is for the altcoin market in general, and the total market cap 3 excludes Ethereum. So now let’s take a closer look at the Ethereum chart and what Benjamin Cowen states about it. 

ETH/BTC

According to Benjamin the price of ETH in BTC is forming a double-top chart pattern indicating a distribution phase. 

50% drop in ETHBTC expected

The last time we saw a double top on the monthly chart, was in Jun 2017 to January 2018, after which a decline of 85% followed. 

With the average monthly returns in the red from June to December, historically speaking, and with the double top forming on the monthly chart, these are the reasons Cowan believes that we are going to see a breakout to the downside. 

According to our chart, there is a significant support zone at 0.036 BTC which is 42.6% lower than the current level of 0.063 BTC. Cowan also points out this zone as the potential ending point of the “altcoin reckoning.”

The reasons behind this altcoin reckoning he sees in the traditional markets and the seasonal correction in the S&P500. Another reason he speculates that could be the catalyst for this ETHBTC plummet is the DeFi depreciating prices and collateral debt position (CDP) liquidations. 

Conclusion 

Cowen is a respected analyst who first came into the scene by introducing logarithmic regression analysis to analyzing Bitcoin and his macro outlooks. He is a Bachelor of Science in Mathematics and a Ph.D. in nuclear engineering, which  “allows him to bring a unique perspective to the crypto verse.”

The analysis he presented is well-researched and backtested, so there isn’t a reason for doubt except for the standard probability chance that the data history indicates the potential future outcome. 

There are strong clues that the altcoin market has indeed reached only halfway in the bear cycle, so another final low could occur with the prices in general decreasing by another 40-50%, and Ethereum is not an expedition. 

Disclaimer

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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