Altcoin Bear Market Warning as US CPI Re-Surges... Benjamin Cowen: "Only Bitcoin Will Endure"

▲ Bitcoin (BTC), Ethereum (ETH), Altcoin/ChatGPT Generated Image

In a video released on his YouTube channel on May 12 (local time), cryptocurrency analyst Benjamin Cowen analyzed the recent Consumer Price Index (CPI) report, stating that headline inflation rose to 3.78%, exceeding market expectations of 3.6-3.7%. Core inflation was also reported at 2.8%, higher than the expected 2.6-2.7%. Cowen interpreted this rebound in prices not as an increase in demand in the early stages of an economic recovery, but as a supply shock stemming from geopolitical conflicts in the Middle East and the energy crisis.

Cowen explained, "With inflation figures hotter than expected, hopes for interest rate cuts in 2026 have vanished," adding, "The market is now pricing in the possibility of no rate cuts even in 2027." He assessed, "The market has started to see a higher probability of interest rate hikes than cuts in 2027," and "The sentiment from last year, which reflected multiple rate cuts in 2026, has completely reversed." Housing costs rose from 3.37% to 3.63%, and transportation prices surged to 6.89%, approaching their highest level since 2022.

The weakness in high-risk assets was also presented as a direct signal of changes in the inflation and interest rate environment. Cowen pointed out that while the S&P 500 is holding near its all-time high, within the cryptocurrency market, altcoins continue to show weakness against Bitcoin (BTC). He stated, "Comparing the total altcoin market capitalization excluding USDT to Bitcoin clearly shows altcoin weakness and rising Bitcoin dominance," adding, "Altcoins have consistently lagged Bitcoin over the past five years."

Cowen emphasized that altcoins are an asset class much more sensitive to interest rates and liquidity than the stock market. Unlike stocks, where traditional fundamentals like corporate earnings can be observed, altcoins are positioned in a higher segment of the risk curve, relying more heavily on interest rate cuts and abundant liquidity. He assessed that with expectations of rate cuts vanishing, the relative weakness of altcoins is unlikely to end easily.

The Federal Reserve's policy dilemma is also growing. Cowen believed that the current stable labor market gives the Fed little reason to cut interest rates. The unemployment rate has shown little significant change for nearly a year, and new unemployment claims and layoffs remain low. However, job openings and quit rates are low, indicating lingering signs of weakening within the labor market. He explained that if initial jobless claims reach 300,000 from the current level of approximately 200,000, it could be considered a recessionary phase.

Cowen warned that if rising inflation and a slowing labor market occur simultaneously, the Fed's options would narrow sharply. If oil prices rise late in the economic cycle, the Fed finds it difficult to navigate between price stability and employment support, a pattern that has historically been a factor in ending economic cycles. He noted that the energy sector has, in the past, continued to show strength for some period even after the overall stock market peak, with XLE rising until May 2008 after the stock market peak in October 2007. Cowen expressed hope that this inflation rebound would be a one-off event, but concluded that as long as geopolitical conflicts and the energy crisis persist, the market will inevitably reflect the risk of renewed price increases.

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