Bitcoin, a Decalcomania of the 2018 Crash..."May Re-enter Bear Market from Late May"

▲ Bitcoin (BTC) crash / ChatGPT generated image

Bitcoin (BTC) is showing a rebound, recovering to the $77,000 level, but a warning has been issued that it is likely a precursor to a fake rally, repeatedly seen in past bear markets.

On April 17 (local time), crypto analyst Benjamin Cowen uploaded a video to his YouTube channel, describing the current Bitcoin surge as speculative with skepticism and raising the possibility of further declines. Cowen explained, "Bitcoin appears to be raising its peak, rebounding to $77,000. However, similar fake rebound patterns were observed during the 2018 and 2022 bear markets." Based on past cases, the analysis suggests that the current bullish trend could be a trap to lure investors within a downward trend.

Seasonal and macroeconomic factors also serve as key grounds supporting the market's weakness. According to seasonal indicators, which show an accuracy rate of about 70% in the virtual asset market, years with US midterm elections generally tend to see the market struggle. Cowen predicted, "A temporary bullish trend may appear until late April and early May. However, from late May to June, there is a high probability of re-entering a strong bearish phase." Furthermore, past data analysis revealed that major lows often form in June of midterm election years.

Technically, moving averages and stablecoin dominance are sending crisis signals. Bitcoin is currently facing strong resistance near its 100-day and 200-day moving averages. In past bear markets, there were frequent instances where failing to break through moving averages led to sharp declines. Additionally, the fact that stablecoin dominance, which is the market share of USDT and USDC, has reached a major support level adds to the concern. A rebound in stablecoin dominance means investors are selling their coins and cashing out, which is a precursor to price drops.

Key economic schedules set for late April have been identified as watersheds that will determine the future direction of the market. The US Federal Open Market Committee (FOMC) meeting on April 29, coupled with the Bank of Japan's interest rate decision meeting, is expected to maximize market volatility. Cowen believes there is a high possibility that the market's weakness will resurface around that time. The observation is that a time-based capitulation process, which involves tediously testing support levels and draining investors' spirits rather than a simple price-based capitulation where prices just fall, could continue until the end of the year.

Ultimately, it seems Bitcoin must retest the $60,000 level multiple times and go through a tedious validation process of solidifying its bottom to seize a true rebound opportunity. Cowen advised, "Rather than blindly chasing the current rebound, it is crucial to calmly verify whether key support levels are maintained." He particularly urged investors to maintain a cautious investment stance, being wary of macroeconomic volatility in late April and early May.

*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.*