Benjamin Cowen's Analysis of Bitcoin's Current Situation: Higher Probability of a New Bottom!

Benjamin Cowen, a well-known crypto market analyst, still believes that the bottom of the Bitcoin cycle may not have formed yet. In his latest analysis, he estimates the chance of a bottom forming in the future to be around 65%, while also emphasizing that a set of indicators supports a bullish scenario, and Bitcoin crossing a key level could change his outlook.

According to Mihan Blockchain, Cowen in his new analytical video titled "Bitcoin: Bull Case Vs. Bear Case" examines a range of on-chain, technical, cyclical indicators, and market conditions, attempting to compare the weight of evidence in favor of bulls and bears without relying on a specific narrative. The summary of this analysis indicates that currently, the scales slightly favor the bearish scenario, but the gap between the two scenarios is not very large.

Cowen Still Sees a Higher Probability of a New Bottom

Cowen stated in an interview that in his view, the probability that the Bitcoin cycle bottom is still ahead is about 65%. He considers the realized price of Bitcoin around $53,000 as one of the most important levels for assessing this scenario. According to him, previous bearish market bottoms have ultimately formed below this level, although the timing of reaching the bottom has varied in each cycle.

He said:

There is probably a 65% chance that the bottom will form in the future, and a 35% chance that we have already passed the bottom.

He also provided a timeframe for changing this outlook. Cowen mentioned that if Bitcoin passes through October without registering a lower bottom, the scales will likely shift towards the bullish scenario.

This view aligns with Cowen's previous reports. In July, he also raised the possibility of a bottom forming in the fourth quarter of the year and considered a sustained recovery above the 50-week moving average as one of the significant signs of weakening the bearish scenario.

Why Some Indicators Remain Bearish?

In the new video, Cowen examines a set of on-chain indicators that have not yet shown the usual signals of forming a final bottom. For example, the Puell Multiple has not yet reached the range observed at the bottoms of previous cycles. Additionally, the MVRV Z-Score has not yet fallen below zero like many previous bottoms, and Bitcoin has not yet experienced enough decline to cross the realized price and balance price.

From Cowen's perspective, this is very important; because in previous bearish cycles, the market usually witnessed a broader type of cleansing in on-chain indicators before reaching the final bottom. Low whale activity and the lack of significant spikes in trading volume near the bottom are also other factors that have scored points in favor of the bearish scenario in this video.

However, not all indicators are against buyers. The weekly and monthly RSI levels have reached levels similar to previous bottoms, and forming a higher bottom in the weekly RSI could be a sign of improving momentum. On the other hand, the accumulation and stabilization behavior of long-term holders has also been assessed in favor of the bullish scenario.

Overall, Cowen concludes that bears have a slight edge, but he assesses the difference between the two scenarios as limited. Therefore, instead of relying on a single indicator, he emphasizes the combination of several signals and the changing behavior of the market in the coming weeks and months.

The 50-Week Moving Average: The Most Important Level for Cowen

One of the most important parts of Cowen's analysis is Bitcoin's behavior against the 50-week moving average. In a tweet he posted two days ago, he also emphasized that the price drop of Bitcoin after forming a "Golden Cross" is not necessarily a sign of the beginning of a new bearish market.

Cowen wrote:

The drop of Bitcoin after golden crosses is a normal occurrence. What matters more is the price recovery after this drop.

To explain this, he referred to the cycles of 2019 and 2023. According to Cowen, in both periods, Bitcoin faced a price drop near the golden cross, but afterward managed to register a higher peak, thus confirming the end of the bearish market. In contrast, in 2014 and 2015, Bitcoin failed to reclaim the previous peak after a drop following a golden cross and continued the bearish market by registering a lower peak.

From his perspective, if Bitcoin can create a higher peak after the current drop, this movement will likely be accompanied by the weekly candle closing above the 50-week moving average; a level that Kwon considers one of the suitable indicators for determining the end of a bear market.

He wrote in this regard:

If a lower peak forms and the price again crosses below the 50-week moving average, this will be a sign that the fourth quarter low is on its way as planned.

In simple terms, Kwon believes that Bitcoin's reaction after the current drop is more important than the drop itself. If the price regains strength, creates a higher peak, and stabilizes above the 50-week moving average, the bullish scenario gains more credibility; however, another failure to cross this average could increase the likelihood of a new low being recorded in the fourth quarter.

What Do Social Indicators and Macroeconomic Conditions Indicate?

Kwon has also examined the public interest in Bitcoin in his new video. Some social activity indicators show signs of improvement and bear similarities to 2019 in this regard. However, data such as Google searches and Wikipedia visits remain weak, indicating that public interest in the market has not yet reached the levels of previous bullish periods.

On the other hand, the conditions of traditional markets also form part of Kwon's bearish scenario. He points to the historical pattern of the U.S. stock market during mid-election years; periods that have previously sometimes been accompanied by stock market corrections in the late summer months and the fourth quarter. From his perspective, a significant correction in stocks could exert more pressure on risky assets like Bitcoin if it occurs.

Kwon also considers the possibility of a shift in the Federal Reserve's monetary policy and a strengthening dollar as significant potential risks for Bitcoin in the coming months.

The Bullish Scenario for Bitcoin Is Still on the Table

Despite Kwon's cautious stance, his analysis cannot be seen as a definitive prediction of Bitcoin's downfall. A significant portion of the indicators he has examined, including the RSI status, long-term holder behavior, and some network activity metrics, are also consistent with a market bottom formation scenario.

In fact, the main point of Kwon's analysis is that the market has not yet issued the final signal. He also emphasized in his recent tweet that Bitcoin's next move after the current drop could clarify the bullish and bearish scenarios.

He states:

When this data becomes available, it will likely be the final nail in the coffin for either the bullish or bearish scenario.

Therefore, from Kwon's perspective, two signs are more important than others: recording a higher peak and a stable crossing above the 50-week moving average to strengthen the bullish scenario, and conversely, being pushed back below this average and recording a lower peak to strengthen the likelihood of continued bear market. He also believes that if Bitcoin crosses without recording a new low from October, it will likely lend more weight to the bullish scenario.