Bitcoin Could Experience a Major Correction, Says Analyst Benjamin Cowen
Crypto analyst Benjamin Cowen believes that Bitcoin (BTC) might be due for a significant correction based on historical price patterns. Cowen, with a large following on YouTube, notes that he is closely monitoring Bitcoin’s 100-week simple moving average (SMA). He points out that in the past, every time Bitcoin has crossed above its 100-week SMA, it tends to retest it before continuing its upward movement. Since BTC crossed above this SMA a few months ago, Cowen suggests that there is a risk of a downside correction based on historical precedent. The actions of the Federal Reserve may also impact whether Bitcoin holds the 100-week SMA as support.
Bitcoin’s Previous Cycles and the Importance of the 100-Week Moving Average
Cowen highlights that during previous cycles, there has been a retest of the 100-week moving average around this point in the cycle. In 2016, although there was no recession, there were concerns about an economic slowdown. Bitcoin retested the 100-week SMA and continued its upward trend. However, in the last cycle, Bitcoin retested the SMA but ultimately fell through. According to Cowen, within the first few months of 2024, there could be another back test of this moving average. Whether it holds or not will likely depend on whether the Federal Reserve achieves a soft landing or faces a hard landing similar to the last cycle.
The Current State of Bitcoin
As of now, Bitcoin is trading at $42,297, which is approximately 36% above its 100-week SMA.
Hot Take: Potential Correction Ahead for Bitcoin
Based on historical price action and the behavior of Bitcoin during previous cycles, analyst Benjamin Cowen suggests that Bitcoin may be on the verge of a significant correction. He points to the 100-week simple moving average as a critical level to watch, as Bitcoin tends to retest it before continuing its upward trajectory. Cowen also notes that the actions of the Federal Reserve could play a role in determining whether Bitcoin holds the moving average as support. With Bitcoin currently trading above its 100-week SMA, it remains to be seen if history will repeat itself or if new market dynamics will come into play.
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