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Bitcoin, the largest cryptocurrency by market cap, seems to be further increasing losses accumulated during its worst week since November 2022.
At the time of writing, BTC had fallen slightly in the previous 24 hours to $26,011, trading around a two-month low after losing over 12% in the previous seven days.
Crypto expert Benjamin Cowen, CEO and founder of ITC Crypto, explains Bitcoin's recent price drop in a new tweet.
It is official.
— Benjamin Cowen (@intocryptoverse) August 21, 2023
Just like in every prior cycle, #Bitcoin dropped below its BMSB in Aug/Sep of its pre-halving year, which also coincided to a drop in #SPX (down almost 5% this month).
Many on here try to overcomplicate things, but pre-halving years get both bulls and bears rekt https://t.co/Apxx1twr7f pic.twitter.com/Degj2c8nV1
Cowen notes a historical pattern that frequently occurs in August and September, resulting in a BTC price correction. He finds that, as in every previous cycle, Bitcoin frequently fell below its bull market support band (BMSB) in August and September of its pre-halving year.
This dip coincides with a drop in the SPX, which is down roughly 5% this month. Cowen points out that this is not unusual, as prehalving years saw both bulls and bears "rekt."
Cowen pointed out this historical trend at the beginning of August, indicating that in the previous three prehalving years, Bitcoin went below its bull market support band in August and September.
According to him, the goal of this correction is to flush out scams and cash grabs before the BTC halving event.
This historical tale unfolded as BTC fell below its bull market support band (BMSB). Following the significant sell-off experienced in the previous week, Bitcoin closed below the bull market support band for the first time since early January.
Last week's drop in Bitcoin was the largest since the bankruptcy of the FTX crypto exchange in the fourth quarter of 2022. BTC's year-to-date gain is now 57%, down from 90% as of mid-July.
Expectations going forward
The likelihood of increasing borrowing costs for a longer period has dampened the appetite for riskier investments across global markets, which also contributed to the BTC drop.
This week, top central bankers will gather in Jackson Hole for the Federal Reserve's annual conference. Fed Chair Jerome Powell's remarks on Friday will be keenly scrutinized for hints about the Fed's policy outlook.
Tomiwabold OlajideAnalysts forecast the S&P 500 stock index to fall another 2% to 3%, with Bitcoin falling to around $25,000. The crypto industry is still hoping for a boost from pending applications to launch U.S. spot Bitcoin and Ether futures exchange-traded funds.
Arman Shirinyan
Alex Dovbnya
Dan Burgin
U.Today Editorial Team
Vladislav Sopov