Amid Liquidity Tightening, Benjamin Cowen Says Only Bitcoin Is Rising as Altcoin Season Disappears

▲ Altcoin / ChatGPT-generated image

The concentration of capital into blue-chip assets such as Bitcoin (BTC) amid tightening liquidity has been identified as the key reason why this cryptocurrency cycle concluded without the anticipated altcoin bull market.

Benjamin Cowen, founder of IntoTheCryptoverse and a veteran investor, said in a video published on his YouTube channel on February 20 (local time) that the current market has been led by Bitcoin rather than experiencing the explosive altcoin rallies seen in the past. He analyzed that the cycle formed its peak in an atmosphere of indifference rather than euphoria, blocking capital rotation into risk assets. Cowen pointed out that as investors increasingly preferred the relative safety of Bitcoin over speculative enthusiasm, altcoins lost their footing.

Cowen cited a liquidity risk model that integrates policy rates, dollar strength, and central bank liquidity supply, diagnosing the current market as being in a highly restrictive tightening phase. During periods of limited liquidity, investors tend to move capital away from altcoins at the far end of the risk curve and into higher-quality assets like Bitcoin. This trend mirrors the stock market, where small- and mid-cap stocks are overshadowed by mega-cap companies such as the Magnificent Seven, resulting in selective gains rather than a broad market rally.

He explained that liquidity flows are following a business cycle in which capital moves from altcoins to Bitcoin, and later into stocks and gold, gradually returning to safer assets. In particular, he noted that the severe sell-off in October last year demonstrated the fragility of the market’s fundamentals, as liquidity in the altcoin market had already been depleted. The continued rise in Bitcoin dominance, excluding stablecoins, serves as evidence that capital entering the market is insufficient to support altcoins.

The broad altcoin bull market seen in 2020 and 2021 was the product of unprecedented monetary easing, whereas the current cycle more closely resembles an expanded version of the tightening phase experienced in 2018 and 2019. Cowen emphasized that expecting another altcoin boom based solely on money supply indicators overlooks the market’s real liquidity risks. For an environment in which all assets rise simultaneously to reemerge, a policy shift such as interest rate cuts would be necessary.

Cowen projected that only after a recession or shock to the financial system leads to a renewed easing of monetary policy will the true era of altcoins return. He expects that in the 2027 to 2029 cycle, when liquidity risk indicators stabilize, altcoins may finally outperform Bitcoin. While the cryptocurrency market is likely to remain focused on a narrow range of blue-chip assets for the time being, he believes a change in the liquidity cycle could reignite explosive growth across the broader ecosystem.

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