Benjamin Cowen discusses a common trend in Bitcoin's post-halving years - a correction in January. He highlights how these corrections, typically triggered by macroeconomic and cyclical factors, are part of Bitcoin’s historical patterns and shouldn’t come as a surprise to investors.
Cowen explains that Bitcoin often experiences significant pullbacks after an impulsive price rally, with corrections ranging from 20% to 40%. Drawing comparisons to previous cycles, he notes similar events in 2017 and 2021, where Bitcoin corrected sharply early in the year. These corrections often align with Bitcoin nearing its 21-week exponential moving average (EMA), a key technical indicator.
This year’s correction seems to have started earlier, in December, with Bitcoin currently down about 12%-13% from its recent highs. Cowen argues that while this dip may feel significant, it’s relatively minor compared to past corrections and fits the expected behavior for this stage of the market cycle.
Macro factors also play a crucial role. He points to the rising 10-year Treasury yield as a headwind for Bitcoin, as its upward trend historically corresponds with weaker performance in risk assets like cryptocurrencies. However, Cowen suggests that if the 10-year yield peaks in Q1, Bitcoin could regain momentum, mirroring patterns seen in 2017 and 2021.
While the current dip may seem concerning, Cowen emphasizes that such volatility is normal for post-halving years. He encourages investors to stay open-minded, as Bitcoin’s historical performance often includes sharp corrections followed by sustained upward movement. He advises cautious optimism and preparation for potential further downside before recovery.
In conclusion, Cowen frames the current correction as a natural part of Bitcoin's cyclical behavior, urging investors to view the situation in context. He stresses the importance of patience and keeping an eye on both technical indicators and macroeconomic trends.
