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▲ Bitcoin (BTC) Decline / ChatGPT Generated Image
Cryptocurrency analyst Benjamin Cowen analyzed in a video uploaded to his channel on May 27 (local time) that a small correction could occur between June and July, given that the S&P 500 has risen for 7 to 8 consecutive weeks recently. He explained that he had suggested a potential 10% decline in the S&P 500 in February, and subsequently, a roughly 10% correction indeed occurred.
Cowen attributed Bitcoin's problem to its failure to properly follow the stock market's strength. While the S&P 500 continued its new high trend, Bitcoin was relatively sluggish, and as a higher-risk asset among risk assets, Bitcoin could face greater downward pressure when the stock market falters.
He also presented a risk zone for the second half of the year, based on the fractal of the S&P 500 to M2 money supply ratio. He explained that there might be a rebound after a small correction in the summer, but a larger correction could begin in the late third quarter to early fourth quarter. Cowen pointed out that in 2018 and 2022, there was also a correction at the beginning of the year followed by a rebound, and then a significant decline again in the second half.
Bitcoin was categorized as an asset that could react more sensitively during such stock market correction phases. Cowen explained that when the S&P 500 declined twice in 2018, Bitcoin made a much lower low during the second decline. A similar trend was observed in 2022, and this time, if the S&P 500 peaks around September and enters a correction, Bitcoin could face bearish pressure more quickly.
He mentioned the fourth quarter as the period for Bitcoin to form a bottom. Specifically, he presented a scenario where if the stock market enters a correction around September, Bitcoin could reflect the impact sooner than stocks, potentially forming a bottom as early as October. However, Cowen believes that the stock market is not in a structure of immediate collapse, as the labor market has not completely fallen apart yet, and new unemployment claims remain low.
Cowen's conclusion is that while the stock market can still find optimism, Bitcoin is in a vulnerable position. He presented a small correction in June-July, a larger correction around September, and the possibility of a Bitcoin bottom in the fourth quarter as key scenarios, warning that positions focused solely on one cryptocurrency asset class could be more exposed to volatility in the second half of the year.
*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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