to leave a comment.
▲ Bitcoin (BTC) decline / ChatGPT generated image
Cryptocurrency analyst Benjamin Cowen analyzed in a video uploaded to his channel on May 27 (local time) that as the S&P 500 has risen for 7 to 8 consecutive weeks recently, a small correction could occur between June and July. He explained that he had previously suggested a potential 10% drop in the S&P 500 in February, and a correction of approximately 10% actually occurred afterward.
Cowen attributed Bitcoin's problem to its failure to properly keep pace with the stock market's strength. While the S&P 500 continued its new high trend, Bitcoin performed relatively sluggishly, and Bitcoin, being in a higher risk segment among risk assets, could experience greater downward pressure when the stock market falters, he diagnosed.
He also presented a risk period for the second half of the year based on the fractal of the S&P 500 and M2 money supply ratio. He explained that while a rebound might occur after a small correction in the summer, a larger correction could begin in late Q3 to early Q4. Cowen pointed out that in 2018 and 2022, there was also a correction at the beginning of the year followed by a rebound, and then another significant decline in the second half.
Bitcoin was classified as an asset that could react more sensitively during such stock market correction phases. Cowen explained that when the S&P 500 declined twice in 2018, Bitcoin made a much lower low during the second decline. A similar trend was observed in 2022, and he believes that if the S&P 500 makes a peak around September and enters a correction, Bitcoin could face bearish pressure even faster this time.
He mentioned the fourth quarter as the period for Bitcoin to form a bottom. Specifically, he presented a scenario where if the stock market enters a correction around September, Bitcoin could reflect the shock earlier than stocks and form a bottom as early as October. However, Cowen believes that the stock market is not in an immediate collapse structure, as the labor market has not completely collapsed yet and new unemployment claims remain low.
Cowen's conclusion is that while the stock market can still find optimism, Bitcoin is in a vulnerable position. He presented a small correction in June-July, a larger correction around September, and the possibility of Bitcoin bottoming in Q4 as key scenarios, warning that a position concentrated solely on the cryptocurrency asset class could be more exposed to volatility in the second half of the year.
*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*
Newsletter
Get key news delivered to your email every morning
to leave a comment.