A widely followed crypto analyst says there’s evidence that Bitcoin (BTC) could have much further to drop before sparking a fresh bull run.
In a new video update, prominent crypto analyst Benjamin Cowen tells his 784,000 YouTube subscribers that the top crypto asset by market cap still has the potential to dip to the $10,000-$12,000 range before we see the next crypto bull market.
Basing his analysis on a series of technical, on-chain and sentiment-based indicators, Cowen says BTC is in a position to potentially make another low, just like how Bitcoin created a new floor after plummeting below $18,000 in June last year.
“There’s enough evidence to suggest that [Bitcoin] could go lower, so therefore I’m going to be open-minded to that potential outcome, just like I was back in the summer when a lot of people were saying June was the bottom. A lot of people are calling June the bottom back then, and it wasn’t, right.”
According to Cowen, Bitcoin’s bottom could potentially even trade around the $10,000 level due to diminishing losses, a concept suggesting that BTC’s decline from peak to trough diminishes with each cycle.
Cowen indicates that the last three times BTC witnessed a bear market, it dropped at least 84% from its previous peak.
“We could go down to $10,000 or $12,000 and still be with diminishing losses. For us to go down 84% from the peak, we have to go below $10,000 or so, so you still have some leeway around that level, you still have some leeway to go to a lower price and still technically be diminishing losses…
Ultimately, I think 2023 is going to be just a choppy year to say the least, a recovery year, where we try to just slowly recover and find a bottom somewhere, whether it’s $15,000 or a lower low, and then we slowly build out from it.”
Looking at historical data from late 2018, Cowen notes that Bitcoin’s bottom tends to correlate with the Federal Reserve’s terminal rate, or the final long-term interest rate the agency sets as its target.
“We know that last cycle Bitcoin bottomed once the Fed hit the terminal rate… Bitcoin bottomed at [$3,000] when we hit the terminal rate, and then when the Fed began to ease, Bitcoin came back down, but it put in a higher low.”
Bitcoin is trading for $22,382 at time of writing, a 9.37% increase during the last 24 hours.
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