Renowned cryptocurrency analyst Benjamin Cowen recently expressed his insights on Bitcoin‘s (BTC) current situation and future growth potential in a video for his YouTube followers. Cowen highlighted Bitcoin’s “critical point,” suggesting that if the top cryptocurrency surpasses a significant moving average on the weekly chart, it could embark on a substantial rally.
How Does 2021 Compare to 2013?
Cowen identified the 20-week Simple Moving Average (SMA) as a pivotal level for Bitcoin’s price action. He noted that surpassing this moving average could unlock further price gains. Drawing from past trends, Cowen likened the current market to 2021, where Bitcoin’s ability to stay above the 20-week SMA led to a bullish phase and an all-time high.
Historically, Bitcoin has demonstrated a tendency to repeat specific patterns following the block reward halving. Cowen argued that breaking above the 20-week SMA is essential for Bitcoin to mimic the major rallies observed in previous years. Additionally, he pointed out similarities with 2013, a year marked by Bitcoin crossing the 20-week SMA multiple times before securing a robust position above it.
What Can 2013 Teach Us About Now?
Cowen elaborated on the 2013 scenario where Bitcoin initially struggled to maintain levels above the 20-week SMA, much like its current market behavior. In 2013, Bitcoin gradually ascended above the 20-week SMA while establishing a sequence of lower peaks. By August, it had firmly positioned itself above the SMA, using it as support in September, leading to a strong rally in the fourth quarter (Q4).
Key Insights for Traders
- Monitor Bitcoin’s movement around the 20-week SMA for potential breakout signals.
- Observe historical patterns, especially from 2013 and 2021, for market behavior insights.
- Be prepared for short-term volatility even if a major rally is anticipated.
Based on historical patterns, Cowen asserts that for Bitcoin to initiate a significant rally, it must break and sustain its position above the 20-week SMA. While this process may involve significant volatility and temporary declines, surpassing this crucial level will likely indicate robust upward momentum for the cryptocurrency.