A widely followed crypto analyst is warning that Bitcoin (BTC) may suddenly undergo a massive correction.
In a new strategy session, Benjamin Cowen tells his 850,000 YouTube subscribers that the extension from the 20-week simple moving average (SMA) is flashing bearishness for Bitcoin.
“If you look at the short-term bubble risk, which is also just the extension from the 20-week moving average, you can kind of see it’s in that range where you can find some of these corrections where Bitcoin comes back down to earth.”
The analyst says that a correction could send Bitcoin back to the bull market support band, which is formed by the 20-week SMA and the 21-week exponential moving average (EMA). The band currently covers the range between $72,000 and $80,000.
“There’s a chance that you see Bitcoin fall all the way back to the bull market support band. But remember last time it kind of just consolidated and waited for the 20-week SMA to catch up. So that’s also an outcome.”
Cowen also suggests that a Bitcoin correction may be more severe than many are anticipating, potentially retesting a trendline that would send BTC down to the $60,000 range.
“I do want to also put one potential outcome on your radar just in case it happens, and that’s basically backtesting this trendline again. We’ve seen that pattern happen a lot with alt/Bitcoin pairs and other random valuations where you’ll see sort of a breakout and then a back test, and then it continues. There is always a chance that something like that happens…
That’s actually what happened last cycle. You basically had sort of a lower high structure. You eventually had a breakout, followed by a major drop down…
You can kind of see something similar happening back over here [in 2022-2023], there were a couple of lower highs that Bitcoin had and then broke out, was up here for a while, backtested it and then moved up…
There’s a chance that you see something like that happen, where Bitcoin, maybe it even spends more time up here and maybe even sets a new all-time high, but it could always backtest this trendline, eventually.”
Bitcoin is trading for $98,610 at time of writing, up 5.8% in the last 24 hours.
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