Analyst Benjamin Cowen believes Bitcoin (BTC) is about to enter a correction phase similar to previous market cycles as the crypto king teeters at $40,000.
In another strategy session, Cowen tells Its 789,000 YouTube subscribers know that Bitcoin has historically seen a massive market correction as the halving approaches.
Every four years, Bitcoin undergoes a halving, where miners’ rewards are halved. The next halving is expected in April.
According to Cowen, the pre-halving correction typically causes Bitcoin to fall to test the 100-week simple moving average (SMA).
“We also tested the 100-week SMA around this time frame, either in the late part of the year leading up to the halving or in the early part of the halving year. We tested it here [around November 2011] in that cycle, just before the half-year arrived. Two cycles ago [in 2016]we tested the 100-week SMA in January and February of the half year.
And then the last cycle [in March 2020] we tested it.
You can say, ‘Well, we only tested it because of the pandemic,’ but it’s happened every cycle. And we even fell under it. Forget testing. We went to the 100 week SMA and then we dropped another 45% from the previous cycle…
Guess where that would take you today? A drop of 45% below the 100-week SMA [at $28,176]that would take you back to the previous low [at $15,355].”
Bitcoin is trading at $40,004, down about 3% in the past 24 hours.
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Generated image: Midjourney