Bitcoin (CRYPTO: BTC) trades around $76,000 amid warnings of a further 10-11% decline toward summer lows if key support fails.
Prominent analyst Benjamin Cowen on Friday argued that Bitcoin's recent rally above $80,000 was likely another bull trap, with historical midterm-year patterns pointing to further weakness.
Cowen compared Bitcoin's price pattern to the 2018 and 2022 midterm years, citing recurring lows in Q1, summer and Q4, alongside 2018-like Fed policy, trade tensions and tech stock weakness.
He highlighted several bearish signals:
- Bitcoin gained only 10% after reclaiming its 50-week moving average, compared with stronger rallies of 35%-50% in previous recoveries.
- Unlike previous bear market bottoms, Bitcoin has yet to record a major selling-volume spike signaling capitulation.
- Stablecoin market capitalization has fallen below its February and July lows, suggesting weakening market liquidity.
- Markets are pricing in nearly an 80% probability of another interest rate hike in December.
- Bitcoin has repeatedly struggled during Q4 of U.S. midterm election years.
Cowen identified $74,900 as critical support for Bitcoin bulls, warning that a sustained breakdown could trigger further losses.
While Bitcoin could briefly dip below this level and recover, another failed rally would strengthen the bearish case.
He highlighted the 200-day moving average near $72,000-$73,000 as the next downside target, followed by a potential return to summer lows.
Cowen warned that limited trading activity between current prices and lower support levels could accelerate the selloff.
Is BTC Nearing Its Final Bear Market Bottom?
Despite his bearish outlook, Cowen believes Bitcoin could approach a major cycle low during Q4 or early January.
He expects the current rate-hiking cycle to be shorter than the one that began in 2022, potentially limiting the severity of the decline.
Persistent inflation, geopolitical tensions and weakening technology stocks could keep pressure on risk assets.
