In a recent development, Aaron Feuerstein discussed a report from Morgan Stanley (NYSE:MS) that highlighted the cyclical nature of Bitcoin, focusing on its "halving" due in April 2024. The report, authored by Denny Galindo, details how this event limits the supply of Bitcoin, often leading to a price surge and initiating a four-phase cycle. Currently, Bitcoin is grappling with the $30k mark.
Galindo outlines the four-phase cycle as follows: Summer, where the price matches Bitcoin's former peak post-halving; Autumn, where prices exceed this peak due to media interest and an influx of new investors; Winter, characterized by a bearish trend causing price drops; and Spring when prices rebound despite low investor interest.
To detect the 'crypto spring', Galindo suggests using indicators such as time since the last peak, the extent of Bitcoin's price drop, miner activities, and other technicals. He cautioned that external factors such as government regulations or software issues can disrupt this cycle. CryptoCon predicts Bitcoin's next cycle top at $128K based on the gains of the first cycle, aligning this with a Trend Pattern Price Model.
Meanwhile, Benjamin Cowen, a top crypto analyst in an interview with Crypto Banter, forecasted a significant correction for Bitcoin before the real bull market. Cowen argued that the current Bitcoin rally is driven by traders swapping higher-risk altcoins for Bitcoin rather than fresh capital injections.
According to Cowen's prediction, a liquidity dry-up from these altcoins will lead to a loss of buy pressure for Bitcoin and subsequent rejection at a resistance level. This could spark a sell-off and plunge in altcoin prices. The unchanged total market cap indicates no new capital entry. When all altcoin liquidity is exhausted, there will be no more bids for Bitcoin causing its price to drop and triggering a crash in the altcoin market. However, post this drop, Cowen anticipates altcoins to outperform Bitcoin in the following three to six months.
Both Feuerstein and Cowen emphasize the need to combine past performance with other analytical methods and an understanding of current market conditions for effective decision-making.
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