A widely followed crypto analyst says that one key level could signal a Bitcoin (BTC) pullback as the top digital asset rallies.
In a new strategy update, crypto analyst Benjamin Cowen tells his 788,000 YouTube subscribers that Bitcoin could dip should it hit the $48,000 level.
To make his prediction, Cowen uses Fibonacci retracement levels, a method of technical analysis for determining an asset’s support and resistance areas.
“We can always look just in the context of history to see how far this one went [from December 2017]. If you look at the retracement tool, and you can see over here [in the middle of 2019] what essentially happened is that we had weekly closes around the 0.50 Fibonacci retracement with wicks up to around the 0.618.
If you take it from here [in November 2021], you can see that the 0.50 [Fibonacci level] is around $42,000. The 0.618 [Fibonacci level] is all the way up at $48,000. So that gives you an idea of where it would have to go if it were going to emulate what we saw over here [in the middle of 2019].
The other way to look at this, of course, is to say what if you measure it from this peak [in April 2021] instead of the second peak in [November 2021]. Then that would put the 0.50 [Fibonacci level] where we currently are and then the 0.618 [Fibonacci level] would be at around $46,000.”
According to Cowen, a move to the downside could cause Bitcoin to retest the $31,000 level based on historical price action.
“We sort of just covered some of those levels. And of course, there’s also this level down here, which is the prior breakout point, which is something that historically gets tested eventually although sometimes it can take months before it gets tested but that’s all the way back down at $31,000.”
Lastly, the trader is predicting a surge in price volatility in the weeks ahead.
“A lot can happen in a relatively short period of time. I imagine volatility is going to only increase over the next few weeks simply because when you get momentum like this, a lot of people are just YOLOing (you only live once) in. They’re throwing a lot of money at it. And sometimes it’ll move up and then you’ll wake up one morning and it’ll wipe everyone out and then everyone panic sells and it just goes right back up. And that’s what happened in mid-2019.”
Bitcoin is trading for $41,874 at time of writing, up 4.2% in the last 24 hours.
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Source: https://dailyhodl.com/2023/12/05/heres-when-current-bitcoin-rally-could-top-out-according-to-crypto-analyst-benjamin-cowen/