A widely followed crypto analyst says one key level could signal a Bitcoin (BTC) pullback as top digital assets rally.
In a new strategy update, crypto analyst Benjamin Cowen says tells its 788,000 YouTube subscribers Bitcoin could drop if it reaches 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 in the context of history to see how far it went [from December 2017]. If you look at the retracement tool, you can see it here [in the middle of 2019] Essentially what happened is we had weekly closes around the 0.50 Fibonacci retracement with wicks up to around 0.618.
If you take it from here [in November 2021]you can see that the 0.50 [Fibonacci level] amounts to approximately $42,000. The 0.618 [Fibonacci level] has risen all the way to $48,000. So that gives you an idea of where it would need to go if it were to emulate what we saw here [in the middle of 2019].
Of course, another way to look at this is to say what if you measure it from this peak [in April 2021] instead of the second peak [November 2021]. Then that would be 0.50 [Fibonacci level] where we are currently and then the 0.618 [Fibonacci level] would be approximately $46,000.
According to Cowen, a move lower could see Bitcoin retest the $31,000 level based on historical price action.
“We’ve actually only covered a few of those levels. And of course, there’s also another level down here, which is the prior breakout point, something that historically, eventually gets tested, although sometimes it can take months to get tested, but that’s all the way back to $31,000.
Finally, the trader predicts a sharp increase in price volatility in the coming weeks.
“A lot can happen in a relatively short time. I imagine volatility will only increase in the coming weeks, simply because when you get that kind of momentum, a lot of people are just YOLOing (you only live once). They throw a lot of money into it. And sometimes it goes up and then you wake up one morning and everyone gets wiped out and then everyone’s panic sold and it just goes back up again. And that is what happened in mid-2019.”
Bitcoin is trading at $41,874 at the time of writing, up 4.2% in the past 24 hours.
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