Bitcoin analyst Benjamin Cowen has issued a warning that Bitcoin (BTC) could enter a bearish phase based on the historical behavior of a commonly used indicator.
During a recent strategy session, Cowen informed his 887,000 YouTube followers that Bitcoin’s Relative Strength Index (RSI) on the weekly timeframe is currently at a crucial support level. This support level has historically signaled the end of a cycle whenever it breaks down.
The RSI is a momentum oscillator that ranges from zero to 100. It is utilized to identify oversold or overbought conditions, with readings above 70 indicating overbought conditions and readings below 30 indicating oversold conditions.
“There have been noticeable similarities between this cycle and the 2016-2017 cycle. Bitcoin is currently attempting to maintain support at a weekly RSI level. If this support breaks, it could indicate the end of the cycle.”
Based on Cowen’s analysis, Bitcoin’s weekly RSI appears to have support at approximately 44.
At the time of writing, Bitcoin is trading at $86,096 with the weekly RSI around 50.
The respected analyst also suggests that if Bitcoin loses the RSI support level on the weekly timeframe, it could indicate underlying issues in the US economy. This might prompt the Federal Reserve to intervene and implement looser monetary policies.
“If the weekly RSI falls below 44, it could signal a shift towards monetary policy intervention by the Fed. The central bank may need to take action to mitigate any potential damage.”
“Unlike in 2019-2020, inflation has become a concern in recent times. This could impact the Fed’s willingness to support the markets swiftly until inflation levels stabilize.”
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