Acclaimed cryptocurrency analyst Dr. Benjamin Cowen recently shed light on the recurring patterns in Bitcoin’s market trends. With an impressive following of over 785K on his YouTube channel, Cowen draws connections between Bitcoin’s behavior and the fluctuations in the S&P 500 stock index, a correlation that happens roughly every four years.
Unveiling the ‘Secondary Scare’
Cowen introduced the crypto community to the phenomenon he calls the ‘secondary scare.’ This pattern mirrors the S&P 500’s usual dips during August or September of the pre-election year in the US. Taking the current year, 2023, as an example, Cowen observed that the S&P 500 is in the midst of the predicted correction, having fallen by just over 5% since August began.
Bitcoin’s Past Performance
Cowen uses historical data to demonstrate that during these ‘secondary scares,’ Bitcoin has experienced notable drops, ranging from 39% to an astounding 83%. He details these instances as follows:
- In 2019, Bitcoin saw a 61% drop once it dipped below the 20-week moving average.
- The 2015 drop was around 39%.
- The most significant fall was in 2011 when Bitcoin plunged by 82.5% before eventually bottoming out.
In each of these cases, the S&P 500 had a downturn in the third quarter of the pre-election year, which was then mirrored by Bitcoin’s decline.
Predicted Paths for Bitcoin’s Decline
Based on these historical patterns, Cowen proposes three potential scenarios for Bitcoin’s predictable downturn:
- A 40% drop (similar to the 2015 scenario) would put Bitcoin at roughly $17,500.
- A 61% decline, akin to the 2019 situation, would put Bitcoin at around $11,400.
- An 80% drop, which Cowen considers highly unlikely, would significantly reduce Bitcoin’s value.
Simultaneously, Cowen pointed out that XRP had erased all its gains after Judge Analisa Torres ruled it as a non-security. Cowen emphasized that court case outcomes, like the SEC vs. Ripple case, are not lasting drivers for price hikes. He argues that the initial buzz surrounding such events is fleeting, and the cryptocurrency will eventually return to its usual trajectory.
According to Cowen, altcoin values are more influenced by the presence of excess liquidity in the market than by individual events, such as court case outcomes. Excess liquidity refers to an abundance of investable funds, which, Cowen believes, could potentially push altcoin prices higher.
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