Bitcoin: Analyst Predicts Correction Amidst Historical Market Patterns
Analyst Benjamin Cowen suggests that Bitcoin (BTC) is poised for a corrective phase resembling patterns observed in previous market cycles, especially as the cryptocurrency hovers around the $40,000 mark.
During a recent analysis session, Cowen highlights Bitcoin’s historical tendency to undergo significant corrections in the lead-up to its halving events. These halving events, occurring approximately every four years, involve a reduction in miners’ rewards by half, with the next halving anticipated in April.
Cowen explains that the pre-halving correction pattern typically involves Bitcoin’s price dropping to test the 100-week simple moving average (SMA).
Drawing parallels to past cycles, he points out instances such as the testing of the 100-week SMA in November 2011 and January-February 2016, just before the respective halving years. Even in the most recent cycle in March 2020, Bitcoin experienced a similar test of the 100-week SMA.
READ MORE: Coinbase Challenges Treasury’s Crypto Rules: Calls for Clarity and Efficiency
Emphasizing that such tests are not exclusive to specific circumstances, Cowen notes that in the last cycle, despite the influence of the pandemic, Bitcoin not only tested but fell below the 100-week SMA. He further illustrates the severity of the correction by highlighting a subsequent 45% decline from that point in the last cycle.
In projecting the potential impact on the current scenario, Cowen suggests that a 45% drop below the 100-week SMA, equivalent to $28,176, could potentially bring Bitcoin’s price back to the prior low of $15,355.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
