Ben Cowen Sheds Light on Questionable Bitcoin Speculation
Bitcoin and the 100-Week SMA
Ben Cowen, popular analyst, made some assumptions about the Bitcoin price trajectory on his YouTube channel. He explained that in 2012 and 2016, Bitcoin showed consistent patterns, but in 2020, it deviated from these patterns. The actions of the Federal Reserve, whether leading to a soft or hard landing, are crucial in this context.
Additionally, Cowen highlights a pattern of Bitcoin’s price retesting the 100-week Simple Moving Average (SMA). Historical observations show that after rising above the 100-week SMA, as seen in late 2015, Bitcoin’s price would eventually drop back to this level, as it did in early 2016. This cycle repeated, with Bitcoin falling below a critical support level when it did retest the SMA.
The point that I’m trying to make – at least the last couple of cycles is that once you get above the 100-week SMA, it would stand to reason at some point in the months following it, you go back and test it.
Bitcoin’s Current Position and Possible Scenarios
At the time Cowen made the video, Bitcoin was toying with the USD $42k range. Cowen suggested if Bitcoin closes the week below this level, it would raise concerns about a potential further downturn. Since around October or November, based on seasonality trends, mid-January has been seen as a period of potential weakness. This prediction somewhat materialised with the current downtrend we are in.
And so far, you can argue that we have had a correction. So, to some degree I think, well there has been a correction in January, but that seems to some degree a little bit of cope if you will – at the end of the day Bitcoin has not really put any lower level.
Cowen further discusses the 50-day moving average (MA), noting that in the current cycle, Bitcoin’s price has fallen below this indicator three times. Each time Bitcoin closed a day below the 50-day MA, it subsequently experienced a further decline of about 15% (ranging between 13% to 15%). These declines occurred after initial corrections had already brought the price down to the 50-day MA.
“Just some speculation. Dubious. Of course, as always.”
Cowen believes there’s a realistic chance that Bitcoin might return to its bull market support levels in the coming weeks. He clarifies that this return doesn’t necessarily have to happen immediately; it could even extend into February, based on past market cycles.
The analyst suggests that the first indicator to watch for is a weekly close below the eight-week moving average, as this would signal potential short-term weakness in Bitcoin’s price.
Cowen doesn’t find the prospect of a correction surprising, noting that even bullish investors expect such downturns. He speculates that if the correction reaches 20%, the price might fall to around USD $38,000. This level is significant because it was a previous consolidation point for Bitcoin before it broke out. Over the next few weeks, it will be interesting to observe whether Bitcoin stabilises at this level, falls back to it, or even experiences a temporary rise before dropping to it.
Cowen closed with a tongue-in-cheek statement aimed at the wild speculations on Twitter, which, conversely to his detailed observations, are often more hype than anything of substance.
So just some speculation. Dubious. Of course, as always, [I] just want people to understand there is downside risk here. There is always the potential upside. Crypto-Twitter will let you know about this.