Bitcoin, Collapses First... Benjamin Cowen: "Precursor to a Dot-Com Bubble Collapse Reenactment"

▲ Bitcoin Bubble

Bitcoin (BTC) is acting as a leading indicator foreshadowing the peak of the global risky asset market, with analysis suggesting that the Federal Reserve's monetary policy is approaching its limits.

On April 11, Benjamin Cowen, founder of IntoTheCryptoverse, stated via his YouTube channel that the recent surge in inflation indicators is putting pressure on the overall asset market, including Bitcoin. The US Consumer Price Index rose from 2.4% to 3.3% in one month. The Federal Reserve (Fed) is reportedly in a difficult position to implement interest rate cuts amidst its goals of price stability and employment maintenance.

Cowen explained that rising energy prices due to oil supply instability from Iran have increased inflationary pressure, pushing back expectations for interest rate cuts to after October. Analysis suggests that limited room for monetary policy operations is expanding pressure across the market.

Bitcoin is showing bearish signals earlier than other risky assets, exposing market vulnerability. Cowen highlighted the trend where declining asset prices impact the real economy, leading to job losses. He stated, “A pattern of asset price declines appearing first, followed by deteriorating employment indicators, is repeating.” He explained that signs of weakening are appearing within the seemingly robust labor market, and coupled with Bitcoin's downward trend, this could accelerate an economic slowdown.

Similar patterns are also observed in technical trends. After forming a past peak, Bitcoin has shown a tendency to repeatedly test levels near that peak for a certain period rather than immediately declining, thereby inducing investors to chase buys. The current bearish trend is also likely to spread to the stock market. Analysis suggests this is similar to the economic trend observed just before the dot-com bubble collapse, which lasted from 1996 to 2000.

The need for a conservative response was also emphasized amid increasing market volatility. Cowen advised considering diversification strategies into real-asset-based assets such as energy-related stocks or metal assets during a Bitcoin downturn. The view is that if interest rate cuts continue to be delayed, the recovery pace of risky assets across the board could also be limited.

Bitcoin is strengthening its role as a leading indicator that proactively reflects macroeconomic risks. The downward trend following a peak is interpreted as a sign that market strength is weakening. Investors need to analyze Bitcoin's movements alongside economic cycle trends and readjust their response strategies.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*