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▲ Bitcoin (BTC)
An analysis suggests that Bitcoin's (BTC) rebound is likely a temporary illusion within a bear market, rather than a new bull market. Contrary to investors' expectations, technical indicators still point to a downward curve.
Cryptocurrency analyst Benjamin Cowen, well-known as the founder of IntoTheCryptoverse, emphasized in a video uploaded to his YouTube channel on April 26 (local time) that market noise should be eliminated by utilizing Heikin-Ashi candles. Heikin-Ashi is an indicator that averages data from previous candles to clearly show trends. A sharp rise on a regular chart appears as a mere rebound within a bear market on a Heikin-Ashi chart.
Cowen presented examples of bear markets during midterm election years as evidence. In April 2018, Bitcoin surged by approximately 34% but ultimately formed a lower low. This April's 13.5% rise also shows a similar pattern to past failed cases. The key point is that Heikin-Ashi candles still remain red. There is not enough data yet to be confident about a trend reversal.
The Federal Open Market Committee (FOMC) meeting scheduled for this week was identified as a variable that could form a short-term peak. In 2018, there was a precedent where Bitcoin peaked immediately after the meeting and declined throughout May. Considering seasonal characteristics, there is a 70% probability of retesting the low in June. The possibility of the Bank of Japan raising interest rates is also a factor increasing downward pressure on the market.
The marginalization of altcoins is evidence of the market's weak underlying strength. A structure where only Bitcoin's dominance increases is a typical characteristic of a bear market. Investor sentiment is extremely sensitive. The data coldly warns of a continued downtrend. The price movements in May and June are expected to be decisive indicators for the future direction.
Cowen disagreed with calling the current rally "the most hated rally." He stated that it is merely a statistical movement that has always existed in past bear markets. Investors should look at the broader trend rather than fluctuating with short-term price changes. Whether this rebound is the last escape opportunity within a bear market or a healthy correction will be proven by the data.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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