Bitcoin Analyst Warns of Potential Correction Based on Historical Patterns
In a recent strategy session, Benjamin Cowen, a renowned crypto analyst with a substantial YouTube following of 784,000 subscribers, has issued a cautionary message to traders concerning Bitcoin (BTC). He points out that historical data suggests the primary cryptocurrency is currently facing a high risk of undergoing a correction.
Cowen sheds light on the bull market support band, which is a crucial indicator of Bitcoin’s performance. This band comprises the 20-week exponential moving average (EMA) and the 21-week simple moving average (SMA). In previous pre-halving years, Bitcoin tends to breach this support band in the first half, only to dip below it again in the third quarter.
Drawing examples from 2011, 2015, and 2019, Cowen highlights the recurring pattern in the cryptocurrency’s behavior. While he cautions against making absolute predictions based solely on historical data, he believes it is vital to consider the risk of Bitcoin following a similar trajectory as in the previous three pre-halving years. The question remains whether Bitcoin will manage to hold the bull market support band this time or not.
Cowen suggests that such a scenario could have repercussions on other digital assets, like Ethereum (ETH), which are already trading below their respective bull market support bands. He points out that if Bitcoin falls below its support level, it could trigger significant losses for various assets, given their current positions in the market.
Taking Ethereum as an example, Cowen notes that the cryptocurrency is currently close to its 20-week estimate, with the price hovering around $1,859. He emphasizes that this is a critical level to watch as a similar event in 2019 led to a significant downtrend in the latter half of that year.
At the time of writing, Bitcoin is trading at $29,331, while Ethereum is priced at $1,861.
In conclusion, Cowen’s analysis serves as a valuable reminder for traders to be mindful of historical patterns and their potential impact on Bitcoin’s performance and that of other digital assets. While past performance doesn’t guarantee future outcomes, it’s essential to stay vigilant and assess the market with caution.
