Bitcoin, 2018 Deja Vu...Benjamin Cowen: "This is a trailer for the second half's crash"

▲ Bitcoin (BTC), decline/ChatGPT generated image

Bitcoin (BTC) has reached the 200-day moving average, which is considered the strongest resistance line in a bear market. Consequently, the possibility of an additional crash in the second half of the year, based on historical parallel theories, is being strongly raised.

Cryptocurrency analyst Benjamin Cowen analyzed in a video released on his YouTube channel on May 11 (local time) that Bitcoin is facing the vicinity of the 200-day moving average, which has acted as strong resistance in several past bear markets. Cowen reminded that this indicator was a key barrier suppressing price increases during the bear markets of 2022, 2018, and 2014. He diagnosed that it is difficult to be optimistic about the current rebound, based on the fact that while it briefly broke through that line in 2014, it ultimately failed to settle and the trend reversed.

Currently, Bitcoin's trend appears to be precisely replicating the pattern of the 2018 bear market, but on a 10x scale. Cowen explained that the low formed in February 2018 and the higher low in April eerily match this year's $60,000 low in February and $65,000 low in April. He analyzed that the situation in 2018, when Bitcoin tested support around the $6,400 level and then rallied to the 200-day moving average in May, parallels the current rebound from the $64,000 level.

Similarities were also found with the 2019 case in the relationship between the end of quantitative tightening (QT) policy and the formation of price highs. In 2019, QT concluded two months after the price peaked in June; similarly, this time, QT is expected to end in December, exactly two months after the projected peak in October 2025. Cowen emphasized that even in 2019, Bitcoin briefly surpassed the 200-day moving average, but this attempt was short-lived, and it eventually reverted to a downtrend.

The temporary green candles appearing on the monthly Heikin Ashi chart are also considered premature as a definitive signal of a trend reversal. Cowen pointed out that in the mid-bear markets of 2014 and 2019, short periods of green candles also appeared, misleading investors, but ultimately the downtrend continued. Just like in past cases where recession fears became clear, if macro indicators such as a deteriorating labor market or rising unemployment rates falter, the market will abandon optimism and immediately reflect the real economic crisis in prices.

While there's a possibility that Bitcoin could temporarily surpass the 200-day moving average, it is highly probable that the price will eventually turn down again within the year, returning to a downtrend. Macroeconomic headwinds such as rekindled inflation or an economic recession are expected to serve as justifications for price declines. With the strength of resistance zones confirmed by historical data coupled with the uncertainty of the macro environment, the market remains in a temporary rebound phase within a bear market.

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