Bitcoin: A Critical Moment

Benjamin Cowen argues that a weekly close below the May high would look highly bearish because it could represent a fakeout above the range high before fourth-quarter weakness. He says a close above the range high would indicate further acceptance of the bull market.

Cowen says the relevant Bitcoin level is approximately $83,000, or about $82,800 depending on the exchange. In his view, a close below that level would make fourth-quarter weakness his base case.

The analyst emphasizes that Bitcoin’s higher high makes him less deterministic about a new low. He says weakness could still occur, but the less bearish possibility must also be considered.

Cowen uses silver’s 2012 price action as a comparison, saying Bitcoin could follow a similar pattern if it closes back below the prior range high. He notes that silver rallied roughly 6% above its prior high before reversing.

He argues that rising bond yields and a stronger dollar create a difficult macro backdrop for Bitcoin, but says Bitcoin’s ability to hold above the May high despite those pressures would weaken the bearish case.

Cowen identifies the 30-year Treasury yield as having reached 5.5% and says it is probably heading toward 6%. He attributes a possible Bitcoin fakeout to renewed pressure from bond investors, or the “bond vigilantes.”