Since the start of the year, Bitcoin has seen a dramatic surge, increasing by over 160%. Amidst this rise, crypto analyst Benjamin Cowen has issued a warning that Bitcoin could face a collapse similar to the one in 2019. Cowen’s analysis, shared with his YouTube subscribers, highlighted a price formation that preceded the major drop in 2019, suggesting that a similar pattern could emerge once again.
Cowen’s scrutiny of the 2019 chart reveals that after the formation in question, Bitcoin’s price plummeted from around $13,000 to $9,167. The chart also shows that during the period when interest rates hit rock bottom in 2019, Bitcoin fell below $4,000. Cowen continues to caution that Bitcoin could reach a local peak and then drop about a month before a Federal Reserve (Fed) interest rate cut, as it did back in 2019.
The analyst notes that some believe the Fed might initiate an interest rate cut in January 2024 after a long period of rate hikes, while the majority expect the cut to start in March. He points out that Bitcoin’s last local bottom was not low enough and did not correspond to the dip levels seen after the 2019 bottom. The peak formation at that time occurred before the Fed began reducing interest rates.
Cowen has been discussing the possibility of a new rate cut for over a year, noting that Bitcoin reached its peak approximately a month before the first rate cut in July 2019. The timing of the next interest rate cut is a matter of speculation, with opinions divided between January and March. The outcome will largely depend on the labor market’s performance between now and then.
The potential impact of the Fed’s monetary policy on Bitcoin’s price trajectory is a significant concern for investors. Cowen’s warnings suggest that history might repeat itself, and Bitcoin could be on the verge of a significant downturn if the patterns from 2019 reoccur. As the market anticipates the Fed’s next move, Bitcoin’s future remains uncertain, with the possibility of a repeat of the past looming over its current gains.