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As Bitcoin (BTC) repeatedly fails to break through key technical resistance levels, warnings that a historical 4-year bearish cycle has begun are clashing head-on with counterarguments that strong downside defense is being confirmed.
The crypto-specialized podcast "The Lark Davis Show" analyzed in an episode on May 20 (local time) that Bitcoin is still following the 4-year cycle rule, which repeats 3 years of rise and 1 year of decline. In-house technical analyst David presented as evidence that the period from the peak to the bottom in past cycles was 364 days and 378 days respectively, forming approximately a 1-year downtrend. Bitcoin also entered a correction phase exactly 3 years after its peak on October 6 this time. David said, "For now, until other evidence emerges, the 4-year cycle should be considered to be maintained."
Technical trends also lend weight to the possibility of entering a bearish cycle. In past bear markets, Bitcoin fell below the 200-day simple moving average, then failed to overcome that line during the rebound, facing resistance, which subsequently led to a final sharp decline. Recently, Bitcoin also failed to break both the 200-day simple moving average and the 200-day exponential moving average, after which its price turned downwards. The Lark Davis Show pointed out that this pattern resembles the technical structure repeatedly seen at the beginning of past bear markets.
However, caution is also raised regarding the "38,000-dollar bottom" theory and a 70% crash similar to the past. The extent of Bitcoin's historical bear market corrections has shown a decreasing trend with each repetition: 87% three cycles ago, 85% two cycles ago, and 77% in the last cycle. While some staunch bearish proponents anticipate a fall to 38,000 dollars, reflecting a 70% correction in this cycle, the current correction from the peak after 224 days stands at only 39%. Considering that Bitcoin had already fallen by 70% at the same point in the previous cycle and by 58% in the cycle before that, the current price is maintaining a higher level than in past bear markets.
Another variable is that only five months remain until the expected 4-year cycle bottom in October. For Bitcoin to drop to 38,000 dollars, it would need to plummet an additional 50% over the next five months. Currently, strong waiting capital, such as Michael Saylor's buying pressure, is supporting the downside, leading to observations that an extreme crash would not be easy unless a catastrophic level of shock occurs. Accordingly, scenarios have also been raised that Bitcoin could form a double bottom around 60,000 dollars or end its bearish cycle early in the 50,000-dollar range.
If the macroeconomy and stock market collapse simultaneously, the 38,000-dollar bottom theory could regain strength. Institutional investor Tom Lee warned that the S&P 500 index could plummet by 15% to 20% during the summer. Analysts believe that if this scenario materializes, the Nasdaq index could fall by 20% to 30%, and Bitcoin could also drop by up to 50%, making the 38,000-dollar bottom a reality. Unless a macroeconomic shock occurs, the time limit for bears to trigger the desired level of crash is becoming clear.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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