Cowen explains why Bitcoin dropping back below the bear market resistance band is not a surprise, and why the pattern playing out right now looks almost identical to previous midterm years.
Key Points
Key Highlights:
- Bitcoin barely had any follow through above the bull market support band before getting rejected, a classic sign of a bear market fake out rather than a genuine breakout
- The pattern of rallying to the 200 day moving average and then slowly bleeding back down has happened in 2014, 2018, and 2022 without exception
- Inflation coming back and rate hikes being priced in continues to be a macro headwind, pushing Bitcoin further down the risk curve than stocks
- A local low is expected somewhere around June or July, followed by a bounce, and then potentially a final low in September or October
- The 200 week moving average is the date with destiny and will almost certainly come into play before the bear market is over
- The single most effective Bitcoin strategy across every cycle has been simply buying at the end of midterm years and selling at the end of post halving years, nothing more complicated than that
Takeaway Bitcoin is doing exactly what it always does in midterm years, drawing people back in with convincing rallies before fading again. The price target matters less than the timing, and right now the clock says we are still inside the window of weakness with Q4 being the most likely turning point.
