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Introduction
Dr. Benjamin Cowen, a famend crypto analyst with a wealthy background in Engineering, Computational Arithmetic, and Programming, just lately supplied insights into Bitcoin’s present market habits. With a considerable following of over 785K on his YouTube channel, Cowen delved into the patterns that Bitcoin appears to comply with each 4 years, linking it to the habits of the S&P 500 inventory index.
The “Secondary Scare” Phenomenon
Cowen launched the idea of the “secondary scare” within the crypto world, drawing parallels with the S&P 500’s tendency to expertise corrections in August or September of its US pre-election yr. Observing the patterns of 2023, Cowen identified that the S&P 500 is presently present process the anticipated correction, having declined by barely over 5% because the starting of August.
Bitcoin’s Historic Habits
Drawing from historic information, Cowen highlighted that in previous “secondary scares,” Bitcoin has witnessed vital drops starting from 39% to a staggering 83%. He supplied a breakdown of those occurrences:
- In 2019, Bitcoin skilled a decline of 61% as soon as it fell beneath the 20-week shifting common.
- In 2015, the drop was roughly 39%.
- Essentially the most drastic drop was in 2011, when Bitcoin plummeted by 82.5% earlier than lastly discovering its backside.
In all these situations, the S&P 500 skilled a drop within the third quarter of the pre-election yr, which was subsequently adopted by a Bitcoin downtrend.
Potential Situations for Bitcoin’s Decline
Primarily based on the historic precedent, Cowen introduced three potential situations for Bitcoin’s decline:
- A 40% drop (akin to the 2015 state of affairs) would place Bitcoin at roughly $17,500.
- A 61% decline, just like the 2019 state of affairs, would see Bitcoin valued at round $11,400.
- An 80% drop, which Cowen deems extremely unlikely, would considerably decrease Bitcoin’s worth.
On the identical, Cowen highlighted that XRP had misplaced all of the positive factors it had made after Decide Analisa Torres dominated it as a non-security. Cowen emphasised that occasions just like the SEC vs. Ripple case final result will not be lasting drivers for value hikes. He believes that the preliminary pleasure surrounding such occasions is transient, and the cryptocurrency will finally revert to its common trajectory.
Cowen posits that the worth of altcoins is extra influenced by the presence of extra liquidity out there than by particular person occasions, comparable to court docket case outcomes. Extra liquidity signifies a surplus of investable funds, which, in line with Cowen, might probably push altcoin costs larger.
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