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High-profile crypto analyst and trader Benjamin Cowen is discussing what a relief rally could look like for Bitcoin.
In a new update, Cowen says that if Bitcoin rallies in the coming period, it could bounce off the 50-week simple moving average (SMA).
Reflecting on historical price action, Cowen reasons that a bounce from the current level, which is just below $32,000, could allow Bitcoin to rise by 34% to 62%.
“Where could a bounce come? The 50-week [simple] moving average – we’ve had a bounce off the 50-week SMA many times in the past… If you go back to 2014, we had a bounce off the 50-week SMA. From the 50-week SMA, we went up about 62% or so.
In 2018, we had a bounce off of it. That year, we went up around 45%. In 2019, also sort of had a bounce. It flirted with that line for a couple of months, and then when we moved back up, we went up about 34%.”
Looking at Bitcoin’s history of bouncing off the 50-week SMA, Cowen says a relief rally could take BTC to higher price levels.
“If we do get a bounce off the 50-week [SMA], we can at least see prior moves did not have us putting in new all-time highs immediately. If we were to go up, say approximately [based on] the prior moves … a 34% move would take us back up to maybe $44,000. A 45% move would take us up to around $46,000… And a 62% move would take us up to around $52,000 or $53,000.”
Cowen says that, although a rally off the 50-week SMA could push Bitcoin above $40,000, he can also see Bitcoin building a larger base before igniting the next leg of its bull cycle.
“I think it’s important for the health of the market, in order for us to have a hope of ever going to $100,000, that we actually build out some decisive support at levels above $20,000, and so far, I don’t really think we’ve done that. The last time we held the bull market support band as support was at $10,000. I would like to see it at $30,000, that would be the most optimistic thing. But in order for us to do that, we need to spend some time. This has got to come back down…
A more bearish case would be we go to $20,000 or something… I think we need to hold it at support, for us to hold above $20,000 as support, above the 20-week SMA you could be looking at the end of the year. You could be looking at early next year before that happens.