Widely followed crypto analyst Benjamin Cowen says that a strong capitulation for Bitcoin might be needed before traders can start talking about a bullish reversal.
In a new strategy session, Cowen says that previously, he called for a capitulation to fuel the next leg of the Bitcoin’s bull run but never really got what he was looking for.
With BTC collapsing under the $40,000 level for the third time, the closely followed analyst is now looking at what a potential capitulation would look like.
Cowen points to three of the most important long-term moving averages that have held BTC up at support in its multi-decade growth trajectory, which are the 300-week, 200-week and 100-week moving averages. He says a dip below the 100-week simple moving average (SMA) is historically a prime opportunity for bulls.
“One of those realistic scenarios would just be to look at some of the long-term moving averages we’ve held as support in the past. You have the 200-week… You also have the 300-week, and then you have the 100-week. So you simply look at these three areas as sort of value areas. The 100-week is SMA is currently at around $36,000, so if you isolate the 100-week moving average, what you’ll notice is that anytime we go below the 100-week, that period is like the best time to buy Bitcoin going into the new bull market…”
While Cowen says the 100-week moving average would be the next major line in the sand for Bitcoin, he says that if momentum picks up, BTC could spike down further to test the next big level at the 200-week moving average, currently about 40% away from current prices.
“Below that, you obviously have the date with destiny… that is the 200-week moving average. That is currently at $21,600, so if Bitcoin were to go to $21,600, you’re talking another 40% drop. I know that sounds like a lot, but listen… You have to remember that, just saying things like ‘it can’t happen’ and whatnot, well, it has happened before too. I was a buyer of Bitcoin at $6,000 and I watched it go to $3,000. I was a buyer of Bitcoin at $7,000 and $10,000 and I still watched it go back down to $3,800. So don’t let people tell you it can’t happen. We’ve seen it happen before.”
As far as the 300-week moving average, Bitcoin has only ever touched it once for a brief amount of time during the Covid-induced market collapse of March 2020. Cowen says he doesn’t expect it to happen, but notes BTC’s 300-week moving average currently sits at around $21,400.
At time of writing, Bitcoin is trading at $37,807.
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