Bitcoin May Be Entering a Downtrend, Warns Analyst
Popular crypto analyst Benjamin Cowen suggests that Bitcoin (BTC) may be entering a downtrend, according to a new strategy session. Cowen points to the extension from the 20-week simple moving average (SMA) as a bearish indicator for Bitcoin. He notes that previous market cycles have shown that when the extension from the 20-week SMA reaches a certain level, it often marks a mid-cycle top for Bitcoin.
Zooming out, Cowen points out that Bitcoin tends to print cycle tops when the extension from the 20-week SMA touches its diagonal resistance. He shares a chart that shows BTC hitting a mid-cycle top in 2019 when the indicator approached its diagonal resistance. Currently, the extension from the 20-week SMA is hovering close to the long-term diagonal resistance, leading Cowen to question whether this could be another mid-cycle top for Bitcoin.
While the extension from the 20-week SMA tends to have diminishing volatility as the market enters peak bull mania mode, Cowen argues that the previous cycle’s extension was not as significant as the current one. He highlights that when the extension is hit, it usually corresponds to much more significant tops, like all-time highs. This raises the question of whether the current level can be considered a mid-cycle top for Bitcoin.
As of now, Bitcoin is trading at $39,365, experiencing a slight decrease over the past 24 hours. Investors and traders should closely monitor Bitcoin’s price movements as it approaches the 20-week SMA and diagonal resistance.
Bitcoin’s Downtrend Indicator: The Extension from the 20-week SMA
One key indicator of Bitcoin’s potential downtrend is the extension from the 20-week simple moving average (SMA), according to crypto analyst Benjamin Cowen. The previous market cycles have shown that when the extension from the 20-week SMA reaches a certain level, it often indicates a mid-cycle top for Bitcoin. Cowen highlights the importance of monitoring this indicator as Bitcoin approaches the 20-week SMA and its diagonal resistance.
Historical Patterns: Bitcoin’s Cycle Tops and Diagonal Resistance
Taking a broader view, Cowen observes that Bitcoin tends to form cycle tops when the extension from the 20-week SMA touches its diagonal resistance. He shares a chart that illustrates how BTC reached a mid-cycle top in 2019 when the indicator approached the diagonal resistance. Now, with the extension from the 20-week SMA again close to the long-term diagonal resistance, Cowen questions whether history will repeat itself and this could be another mid-cycle top for Bitcoin.
The Diminishing Volatility of Bitcoin’s Extension from the 20-week SMA
Analyzing the longer-term timeframe, Cowen notes that the extension from the 20-week SMA tends to exhibit diminishing volatility in peak bull mania mode. Comparing the current cycle with the previous one, Cowen observes that the extension from the 20-week SMA is more significant now. The previous cycle’s extension did not reach the current level, suggesting that if the extension is hit, it could correspond to a much more significant top, possibly an all-time high.
Bitcoin’s Current Price and Outlook
At the time of writing, Bitcoin is trading at $39,365, showing a slight decrease in the last 24 hours. As Bitcoin approaches the 20-week SMA and diagonal resistance, investors and traders should closely monitor its price movements to determine if a mid-cycle top is forming.
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should conduct their own research before making any high-risk investments in Bitcoin, cryptocurrency, or digital assets.
Analyst comment
This news can be considered neutral. The analyst warns that Bitcoin may be entering a downtrend based on the extension from the 20-week SMA. However, it also highlights the importance of monitoring the indicator as Bitcoin approaches the SMA and diagonal resistance. Investors and traders should closely monitor Bitcoin’s price movements to determine if a mid-cycle top is forming.
