Bitcoin's Bull Cycle at Risk: Analyst Warns of $71K Threshold

In the ever-volatile world of cryptocurrency, Bitcoin's price movements are a constant source of both excitement and anxiety for investors. Recently, prominent analyst Benjamin Cowen has sounded the alarm, warning that if Bitcoin drops below $71,000, the current bull cycle could be in serious jeopardy. This prediction is based on a combination of historical price patterns, key support levels, and macroeconomic factors that are currently shaping the market landscape.

Cowen's analysis draws a parallel between the current market dynamics and the 2017 bull cycle, where Bitcoin tested the previous year's high before undergoing a significant correction. In 2017, Bitcoin experienced a drop in early 2017 where it tested the 2016 high. This historical pattern suggests that if Bitcoin retests the 2024 high and fails to maintain support above $71,000, it could signal the end of the current bull cycle. Cowen emphasizes that maintaining support above $70,000 to $73,000 is crucial for the bull cycle structure to remain intact. He warns, "If it holds support above $70,000, $73,000, [the] structure of the market is fine. If it goes into the $60,000s, then I would argue that the more likely outcome would be a macro lower high in Q2, Q3, potentially around like the August timeframe."

The macroeconomic environment also plays a significant role in Cowen's prediction. Inflation trends, Federal Reserve policies, and tariffs are all factors that could exacerbate a potential downturn in Bitcoin's price. Cowen expresses concerns about the potential for a 1970s-style inflation bounce due to the Fed's rate-slashing series, which began in September 2024. He warns that this could keep markets on edge, making it difficult for risk assets, including Bitcoin, to experience a durable bounce. Cowen states, "There likely will not be any type of durable bounce by risk assets until at least March OPEX… It could take as long as early to mid-April if the markets are going to simply wait for more macro data to come in, meaning labor market data and inflation data." This suggests that until there is more clarity on macroeconomic indicators, Bitcoin and other risk assets may remain volatile.



The implications for other risk assets are also significant. Cowen's analysis suggests that if Bitcoin's price drops below $71,000, it could signal a broader bearish trend for risk assets. This is because Bitcoin often serves as a leading indicator for the broader crypto market and other high-risk investments. If Bitcoin's price movement indicates a bearish trend, other risk assets like stocks and commodities could also experience sell-offs as investors become more risk-averse.

Furthermore, the Federal Reserve's cautious approach to interest rates, as indicated by Chair Jerome Powell, adds another layer of complexity. Powell's statement, "We do not need to be in a hurry and are well-positioned to wait for greater clarity," suggests that the Fed is unlikely to cut rates in the near future. This could prolong the period of uncertainty and volatility for risk assets, including Bitcoin. Timothy Peterson, another analyst, echoes this sentiment, warning that delaying rate cuts could trigger a downturn in the market, pushing Bitcoin's price back toward $71,000. Peterson wrote, "It’s time to talk about the next bear market. There’s no reason to think it couldn’t happen now. The valuation justifies it. What it needs is a trigger. I think that trigger may be as simple as the Fed not cutting rates at all this year."

In summary, the current macroeconomic environment, characterized by inflation concerns and Federal Reserve policies, creates a challenging backdrop for Bitcoin's price movements. Cowen's predictions suggest that until there is more clarity on these macroeconomic factors, Bitcoin and other risk assets may remain volatile, with potential implications for broader market trends. Investors should approach the market with caution and stay updated on key developments.