Bitcoin might be in for a rough ride, according to analyst Benjamin Cowen. With the cryptocurrency currently hovering around $40,000, Cowen suggests that history might be repeating itself, signaling a potential correction phase.
Cowen, addressing his 789,000 YouTube followers in a recent strategy session, points to a pattern in Bitcoin’s historical behavior. He notes that approaching the halving event, which occurs every four years and halves miners’ rewards, tends to trigger significant market corrections.
The upcoming halving is anticipated in April, and Cowen draws attention to the pre-halving correction, emphasizing the tendency for Bitcoin to dip and test the 100-week simple moving average (SMA).
Explaining this trend, Cowen mentions past instances: “We’ve consistently tested the 100-week SMA around this timeframe, whether in the late part of the pre-halving year or the early phase of the halving year.” He highlights specific occurrences in previous cycles, such as the tests in November 2011, January-February 2016, and March 2020.
Despite potential skeptics attributing the 2020 test to the pandemic, Cowen insists that this pattern is a regular feature of Bitcoin’s cycles. He points out that in the last cycle, the cryptocurrency not only tested the 100-week SMA but also fell 45% below it.
Applying this historical context to the current situation, Cowen speculates on the potential consequences: “A 45% drop below the 100-week SMA [at $28,176], that would put you back at the prior low [at $15,355].”
As of now, Bitcoin is trading at $40,004, reflecting a 3% decrease in the last 24 hours. Cowen’s insights serve as a reminder that the cryptocurrency market, like any other, is subject to historical patterns that could influence its future movements.
