Bitcoin’s Price Plunge: Analyst Predicts Deeper Drop

Bitcoin Faces Potential Price Slide, Analyst Warns

Quantitative analyst Benjamin Cowen is sounding a cautionary note for Bitcoin investors, suggesting that the current rally might be short-lived and that the cryptocurrency could be headed for a significant price decline. Despite recent upward movements, Cowen believes the market is in a ‘post-euphoric digestion phase,’ and a substantial drop is still possible, potentially even into October.

The Four-Year Cycle and Market Patterns

Cowen’s analysis heavily relies on historical four-year cycles, which have often seen Bitcoin top in the fourth quarter of a post-halving year. He points to 2019 and 2022 as examples where this pattern held true. While acknowledging that this cycle has differed in some ways, such as a lack of widespread altcoin season or a surge in retail interest, Cowen argues that the timing of Bitcoin’s top in Q4 aligns with past trends.

He notes the similarities between the current market conditions and 2019, particularly concerning tight liquidity conditions and a lack of rotation from Bitcoin into smaller altcoins. This pattern suggests a potential ‘time-based capitulation’ rather than a rotation into higher-risk assets.

Economic Indicators Point to Continued Weakness

Beyond crypto-specific cycles, Cowen highlights broader economic indicators that could influence Bitcoin’s price. He points to a weakening labor market and strengthening inflation, suggesting that a recession is still a possibility, even if not triggered by a pandemic. These macro-economic factors, coupled with late-stage business cycle dynamics, suggest that lower-risk assets are topping, and there’s no immediate rotation to higher-risk assets like cryptocurrencies.

Price Targets and Potential Bottoms

Cowen’s analysis suggests a potential price target of around $39,000 for Bitcoin, which would represent a roughly 70% drop from its all-time high. He contrasts this with the views of some market bulls, like Tom Lee, whom he believes may be financially incentivized to maintain a bullish outlook due to their products or funds. Cowen recalls that Lee remained bullish through much of 2022, a period that proved challenging for many investors.

While Cowen estimates a 75% chance that Bitcoin’s bottom is still in the future, he assigns a 25% chance that the low might already be in. He identifies October as the most probable month for a bottom, based on the duration of previous bear markets, which have lasted around a year. However, he notes that a crisis could potentially bring the low forward to May, or it could extend even further.

On-Chain Data Supports Bearish Outlook

Several on-chain metrics support Cowen’s bearish outlook. He points to the percentage of Bitcoin supply in profit or loss, noting that market cycle bottoms historically occur after specific crosses on this metric, which have not yet happened. Similarly, the MVRV Z-score, another key indicator, has historically dipped below zero in midterm years, a level not yet reached in the current cycle.

Furthermore, the year-to-date return of Bitcoin in 2026, when compared to averages from prior midterm years, still tracks within historical norms. Cowen emphasizes that calling the current low would mean ignoring the vast amount of historical data from previous cycles.

Bitcoin vs. Ethereum: A Safer Bet

When discussing the long-term prospects of Bitcoin versus Ethereum, Cowen leans towards Bitcoin as the safer investment. He argues that while Ethereum and other altcoins might offer higher potential returns due to their higher risk, many have historically gone to zero. Bitcoin, on the other hand, has shown resilience and significant gains, even in previous cycles where altcoins failed to deliver.

Cowen suggests that Bitcoin should constitute the majority of a crypto portfolio, with a smaller allocation for Ethereum. He remains skeptical about altcoins in general, citing the continued downtrend in the advanced decline index for the top 100 cryptocurrencies since 2021. He believes that a significant shift towards higher-risk assets like altcoins will likely only occur after the broader business cycle has completely reset.

Navigating the Market

Cowen advises investors to be bearish during bear markets but cautions against remaining bearish for too long. He suggests that by the summer of a midterm year, it may become more prudent to adopt a more bullish stance. He also stresses that significant profits can be made in the middle of market trends, not just at the extremes, implying that precise timing of the absolute bottom is not always necessary to achieve success.

Source: “It’s Not Too Late To Sell Your Bitcoin” Ben Cowen Explains (YouTube)