Bitcoin recently faced rejection at the $60k levels, signaling short-term resistance. This pattern mirrors what happened in 2019, where Bitcoin experienced similar challenges before eventually declining. Analyst Benjamin Cowen compared 2023 to 2019 earlier this year, when many believed Bitcoin would rise to $100,000 before the next halving. However, as more people adopt the 2019 comparison, the analyst now questions if the trend might soon change.
The current Bitcoin trend shows similarities to 2019, where after a peak, Bitcoin quickly formed a lower high and continued to decline. However, the decline in 2023 has been less severe than in 2019. He said that even after the rate cuts in 2019, Bitcoin did not exit its downturn immediately. It wasn’t until the end of the year and into 2020 that the market began to pick up, indicating that Bitcoin’s recovery might follow a similar delayed pattern.
Bitcoin often detects weaknesses in the economy before the stock market does. This was seen in 2019 when gold broke out, signaling issues before the stock market responded. He speculates that the downtrend could continue for the rest of the year, potentially breaking in October if the Federal Reserve (Fed) begins rate cuts.
Bitcoin vs. Altcoins:
Historically, when Bitcoin breaks down, altcoins tend to suffer significantly, often dropping by 70% over 6-9 months. This pattern seems to be repeating, with Ethereum and other altcoins experiencing declines.
He said that smaller market cap altcoins might perform better than larger ones in the near term, not necessarily by increasing in value but by declining less than their larger counterparts. According to him Bitcoin’s price movements often serve to suppress the altcoin market, particularly when Bitcoin’s price declines, which can act as a “reset” for overinflated altcoins.
However, Cowen said that cycles can be deceptive, often showing lower highs and lower lows until a significant pivot from the Federal Reserve occurs. While 2024 has seen a less severe decline compared to 2019, the trend could still change..