Analyst Expects Double-Digit Decline in Bitcoin (BTC), Explains Why

The cryptocurrency market ended the week on a turbulent note, with Bitcoin (BTC) teetering on the edge of the $40,000 support level while other tokens showed a mixed performance.

In financial news, opinions are divided regarding the recent launch of spot BTC ETFs in the US; Some see this as a success, while others call it a failure. However, the truth probably lies somewhere in between. Despite high transaction volumes, Bitcoin’s price is in a downward trend.

On the other hand, the US stock market finished the week on a high note, with the S&P 500 reaching its all-time high. This was despite the decline in interest rate cut expectations. The CME FedWatch tool currently shows the market expecting just a 50% chance of a cut in March, which is a significant drop from last week’s 80% forecast.

Historically, Bitcoin shows vulnerability before the halving. Crypto analyst Benjamin Cowen suggests that BTC could potentially see a double-digit percentage decline if it follows a pattern observed during the previous three halvings.

“In February of the halving years, Bitcoin has always followed the bull market support band,” Cowen said in a YouTube video.

“From current levels this would represent a significant decline of around 15%.”

The bull market support band is an indicator consisting of the 20-week simple moving average and the 21-week exponential moving average and is used to identify potential support levels for the price of Bitcoin during a bull market.

Cowen identified the US economy as the key determinant of whether Bitcoin will fall into the support band, currently around $37,000:

“Bitcoin halving in 2012 and in 2016 we used that, the bull market support band, as support. But in the case of 2020, we did not see this as support. We’ve had a pandemic downturn, we’ve had a recession where the unemployment rate has skyrocketed… If the economy holds up, then we can bounce back from this level. “If the economy doesn’t hold up and the Fed pushes us into recession, then levels may not hold up.”

*This is not investment advice.

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