Bitcoin Mid-Cycle: Popular crypto analyst Benjamin Cowen says one indicator suggests Bitcoin (BTC) could enter a downward trend.
In a new strategy session, Cowen tells its 789,000 YouTube subscribers that the extension of the 20-week simple moving average (SMA) is a sign of pessimism for Bitcoin.
According to Cowen, the indicator shows that Bitcoin may have reached a mid-cycle high.
“The last three peaks, the last three peaks that at least marked a local peak for some time, happened around the time that the 20-week extension was extended. [SMA] reached this level [of about 40%]. So I continue to argue that this is an important level to consider.
Zooming out, the analyst says Bitcoin tends to print cycle highs when the 20-week SMA extension touches its diagonal resistance.
The analyst shares a chart that shows BTC reached a mid-cycle high in 2019 when the indicator approached its diagonal resistance. Cowen says history could repeat itself as the 20-week SMA extension currently sits near long-term diagonal resistance.
“Now, on a longer-term time frame, one of the things I like about this chart is that the extension of the 20-week SMA when you’re in maximum bullish madness mode tends to have this look of decreasing volatility, in which the first cycle, the extension of the 20-week SMA was much more significant. But as one moves from one cycle to the next, the extension is not as great. Now, it kind of begs the question: well, are we going to start this cycle again?
It’s possible, but you can see that in 2019 the mid-cycle peak didn’t reach it. We got a little closer, but we couldn’t even reach it. And in fact, this expansion is way above where we are now. You can see that peak extensions, when reached, tend to correspond to much larger highs, like long-time all-time highs. This begs the question is this the best here? [around June 2019] or is it this one here [in January 2024] a mid-cycle high