A widely followed analyst is issuing a warning to traders about Bitcoin (BTC), saying that history suggests the king crypto is at a high risk of correcting.
In a new strategy session, Benjamin Cowen tells his 784,000 YouTube subscribers that the top crypto asset by market cap tends to break through its bull market support band during the first half of pre-halving years, but then promptly dips right back below it in the third quarter.
Cowen describes the bull market support band as a combination of the 20 week exponential moving average (EMA) and the 21-week simple moving average (SMA).
To make his case, Cowen cites examples of BTC following the same pattern in 2011, 2015, and 2019.
“So we have three examples, which again you can’t necessarily extrapolate from, I’m not asking you to take it to the bank, but it’s just that normally, in the pre-halving, years we will see Bitcoin do well for a good portion of it, but then sometime around the third quarter, we see it fail to hold the bull market support band.
I think that is ultimately the risk that we have to consider: is it going to play out in a similar manner as it has the prior three pre-halving years? Does it fail to hold it, or will this be the first time that it actually holds as support?”
According to Cowen, such an event could also affect other digital assets, such as leading smart contract platform Ethereum (ETH), as they are already moving below their bull market support bands.
“Do note that if [Bitcoin] falls below, then that could lead to other assets of course getting hit pretty hard because a lot of them are already below their bull market support bands.
And if you were to go look at Ethereum, what’s really interesting is this is the week actually in 2019 where Ethereum fell below its 20-week estimate and got a weekly close below it that then started the downtrend for more or less the second half of the year…
Ethereum today is really close to that level, the 20-week estimate for ETH is at $1,859, so we’re actually just right at it.”
Bitcoin is trading for $29,331 at time of writing while Ethereum is moving for $1,861.
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