On 7 July 2024, crypto analyst Benjamin Cowen posted an insightful thread on X (formerly known as Twitter), focusing on Bitcoin’s current position relative to its 200-Day Simple Moving Average (SMA). Cowen noted that Bitcoin (BTC) is currently below its 200D SMA, having hit a local low on 5 July 2024. He emphasized that Bitcoin’s performance in the fourth quarter (Q4) of this year largely depends on how quickly it can reclaim the 200D SMA.

Cowen drew historical parallels to illustrate his point. Cowen says that in 2013, Bitcoin fell below the 200D SMA and reached a local low on 5 July. Following this, it slowly climbed back up to its range highs before experiencing a rally in Q4. Cowen also points out that, similarly, in 2016, Bitcoin dropped below its 200D SMA in August but quickly reclaimed it, leading to a Q4 rally. However, Cowen mentions, in 2019, Bitcoin fell below the 200D SMA in September and was unable to reclaim it, resulting in a decline in Q4.

Cowen suggested that the quicker Bitcoin can reclaim the 200D SMA this year, the more likely it is to see a rally in Q4. Conversely, he believes the longer it takes for Bitcoin to move back above this moving average, the higher the probability of it falling in Q4, similar to what happened in 2019. He emphasized the importance of monitoring the 200D SMA closely to gauge potential market movements.

Cowen also cautioned against relying too heavily on historical comparisons, noting that each year is slightly different and has unique factors that influence Bitcoin’s price. He advised using past years as a reference but not as a definitive blueprint for predicting future outcomes.

The 200-Day Simple Moving Average (SMA) is a key technical indicator used by traders and analysts to identify long-term trends. It smooths out price data by averaging the closing prices over the past 200 days. When Bitcoin’s price is above the 200D SMA, it is generally considered to be in a bullish trend. Conversely, when the price is below the 200D SMA, it is often seen as bearish. A local low, such as the one on 5 July 2024, indicates the lowest price point reached by Bitcoin within a specific timeframe, which can signal potential price reversals or support levels.

According to Cowen, reclaiming the 200D SMA means Bitcoin’s price moving back above this average after being below it. This is often seen as a bullish signal, indicating a potential upward trend. Cowen’s analysis suggests that reclaiming this key moving average quickly could lead to a Q4 rally, whereas a delay could result in a decline before a potential recovery next year.

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