Expert Analyst Compares Current Bitcoin Cycle to 2019 Based on Monetary Policy

Benjamin Cowen, CEO and founder of IntoTheCryptoverse, has again drawn attention to the current Bitcoin cycle’s similarities to the one seen in 2019. 

His analysis focuses on how this year’s economic conditions, particularly the Federal Reserve’s monetary policy, are influencing Bitcoin’s performance.

Unlike previous halving years, 2024 shows signs of slower growth, more controlled upward movement, and the possibility of a downturn. These factors, driven by high interest rates and quantitative tightening (QT), are central to Cowen’s comparison.

“Why I make the comparisons to 2019.”
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— Into The Cryptoverse (@ITC_Crypto) September 10, 2024

Grounded in Monetary Policy

Cowen hinged his comparison between 2024 and 2019 on monetary policy and its effects on Bitcoin’s price movement. He observed that Bitcoin’s price action today reflects the trends of 2019, when the Federal Reserve implemented rate cuts and QT policies.

During both cycles, Bitcoin’s growth appears restrained by the central bank’s tightening measures. However, as in 2019, Cowen suggests that Bitcoin’s price could rise once rate cuts begin, although this may take longer to materialize due to the extended duration of high rates in the current cycle.

The impact of monetary policy has become more evident as Bitcoin’s year-to-date performance shows underperformance compared to previous halving years. Per Cowen, this is a notable difference from earlier halving cycles when lower interest rates and quantitative easing (QE) bolstered Bitcoin’s growth.

As a result, the present cycle reflects 2019’s more gradual movements, with market participants watching closely for potential shifts in the Federal Reserve’s stance.

Bitcoin’s Bull Market and the Role of QT

Cowen distinguished between two types of Bitcoin bull markets: QT and QE bull markets. The ongoing QT bull market, where Bitcoin performs better than altcoins, shows a flight to safety during tighter monetary conditions.

In contrast, QE bull markets allow altcoins to outperform Bitcoin, as liquidity flows more freely. In 2024, Bitcoin has demonstrated its resilience under QT, with its dominance rising as altcoins struggle.

The continued QT environment prolongs Bitcoin’s current phase, much like 2019. This cycle indicates a pattern of increased Bitcoin dominance while altcoins face liquidity challenges. 

Timing of Rate Cuts

Cowen then discussed how Federal Reserve rate cuts could influence Bitcoin’s price. He highlighted the possibility that Bitcoin may require between 165 and 175 basis points of rate cuts to break its lower high structure.

Such cuts could extend into 2025, delaying any major price recovery. This scenario aligns with 2019 when Bitcoin initially fell after the rate cuts but recovered strongly later.

In his previous comparison, Cowen noted that, historically, Bitcoin and the SPX have correlated during key economic events, such as rate cuts. However, Bitcoin’s divergence from the S&P 500 in 2019 could repeat, with Bitcoin following a unique path.

Per Cowen, the upcoming months would reveal whether Bitcoin will replicate its 2019 pattern of underperformance and later recovery, or whether a different trajectory awaits as the Federal Reserve adjusts its policies.