Bitcoin plummeted another 4% for the day, lingering around the $35,000 level, after a tough week. Ethereum, the second-largest token, was down almost 7%.
During the last 24 hours, the global cryptocurrency market capitalization fell to $1.6 trillion from $1.7 trillion, while trading volume increased from $126 billion to $130 billion.
A well-known crypto analyst is analyzing previous Bitcoin (BTC) downtrends in order to forecast a possible Bitcoin (BTC) recovery timetable.
Benjamin Cowen tells his YouTube followers in a new strategy session that high-volume liquidation occurrences have traditionally signified that a support level has been discovered and Bitcoin can rocket to the upside.
Cowen cites liquidation events in December 2018, March 2020, and May 2021 as examples. Despite Bitcoin’s recent price decline, he believes it does not signal the kind of significant capitulation required to give stability before the next great upward surge.
“My philosophy at this point, and it has been for the entirety of Q1, is that I believe Q1 will be bearish, you should assume that the downtrend will continue until proven otherwise.”
When will BTC turn bullish?
Cowen believes that, rather than a slew of new investors, the same retail investors that fueled Bitcoin’s gain in 2020 were also responsible for its climb in the late summer and fall of 2021. As indicators, he uses both on-chain and social metrics.
In terms of what it might take for Bitcoin to wake up and surge to the upside, Cowen points to past red candle patterns, which he refers to as “brick walls,” that gave support for a market trend change followed by a BTC rally in late 2019 and early 2020.
He says, we’re simply looking for another wall to hit, where the volume gets so high that we just liquidate everyone who asks to be liquidated, and then we can start to see a healthy market.
“I don’t think the entirety of 2022 is going to be bearish. I think Q1 is going to be a red quarter and maybe Q2 is going to be a red quarter. But I think that as we get later into the year we’ll see things turn back around.”
No one knows for sure when such an event will occur, but Cowen remains optimistic that Bitcoin will regain positive attitude in 2022.