The week concluded with a tumultuous performance in the cryptocurrency market, where Bitcoin (BTC) hovered precariously around the $40,000 support level, while other tokens displayed a mixed range of results.
In financial circles, opinions diverged on the recent introduction of spot BTC ETFs in the US, with some viewing it as a success and others labeling it a failure. However, the reality likely lies somewhere in the middle. Despite notable transaction volumes, Bitcoin’s price is currently on a downward trajectory.
Contrastingly, the US stock market wrapped up the week on a positive note, with the S&P 500 achieving a record high. This occurred despite diminishing expectations for an interest rate cut. The CME FedWatch tool indicates a 50% probability of a cut in March, a significant decline from the 80% forecasted the previous week.
Examining historical trends, Bitcoin has exhibited vulnerability before each halving. Crypto analyst Benjamin Cowen suggests a potential double-digit percentage decline for BTC if it adheres to the observed pattern in the lead-up to the past three halvings.
“In the February of halving years, Bitcoin has consistently adhered to the bull market support band,” noted Cowen in a YouTube video.
The bull market support band comprises the 20-week simple moving average and the 21-week exponential moving average. It serves as an indicator to pinpoint potential support levels for Bitcoin’s price during a bullish market.
Cowen has highlighted the US economy as the pivotal factor determining whether Bitcoin will align with the support band, currently situated around $37,000. He stated, “During the Bitcoin halving in 2012 and 2016, we relied on the bull market support band as a source of support. However, in the case of 2020, it did not function as support. We experienced a pandemic-induced downturn and a recession with a surge in unemployment rates. If the economy remains robust, we have the potential to rebound from this level. On the other hand, if the economy falters, and the Fed leads us into a recession, these levels may not be sustained.”