What is the significance of the 20-week simple moving average (SMA) and the 21-week exponential moving average (EMA)?
According to cryptocurrency analyst Benjamin Cowen, investors should pay close attention to Bitcoin’s recent close above its bull market support band, which is comprised of the 20-week SMA and the 21-week EMA. These two moving averages have historically served as key indicators for Bitcoin’s momentum.
- Bitcoin has attempted similar breakouts twice already in 2024, with both July and August seeing the cryptocurrency briefly rise above the support band before failing to hold these levels.
- Despite this, the current situation may be different, with the critical difference being whether Bitcoin can maintain its position above these indicators for at least two consecutive weekly closes.
What does Benjamin Cowen say about the current situation?
Cowen states that if Bitcoin can close the next two weeks above the 20-week SMA, then it’s pretty optimistic. However, if we get a weekly close below the 21-week EMA, then his guess is that we get a new low.
“If Bitcoin can close the next two weeks above the 20-week SMA, then it’s pretty optimistic. However, if we get a weekly close below the 21-week EMA, then my guess is that we get a new low.”
– Benjamin Cowen
The Importance of Social Risk
Cowen’s analysis is based on his “social risk” metric, which measures surprisingly low retail interest in cryptocurrency. Despite Bitcoin’s significant price appreciation in 2024-2025, social engagement metrics remain far below the levels seen during the 2021 bull market.
- Despite Bitcoin’s significant price appreciation in 2024-2025, social engagement metrics remain far below the levels seen during the 2021 bull market.
- The social risk is made up of five different risk metrics, including YouTube subscribers and views, Twitter followers to analysts, exchanges, and Layer-1 projects.
Why does this disconnect between price performance and retail engagement matter?
This disconnect mirrors patterns seen in 2019, which Cowen attributes to similar monetary policy conditions. Quantitative tightening and limited rate cuts are key factors suppressing broader crypto market enthusiasm.
| Monetary Policy Conditions | 2019 | 2020 and 2021 |
|---|---|---|
| Quantitative tightening | Yes | No |
| Rate cuts | No | Yes |
What does this mean for the altcoin market?
The altcoin market reflects this lack of retail participation, with Cowen noting that “altcoins keep bleeding to Bitcoin” as evidenced by Bitcoin’s dominance rising for eight consecutive weeks.
The Next Few Weeks
For investors, Cowen suggests the next few weeks will be critical in determining whether Bitcoin can maintain its technical strength, or if the current move represents another false breakout.
While Bitcoin trades above its bull market support band, the total altcoin market capitalization hasn’t even reached its 21-week EMA. This could indicate that Bitcoin’s recent close is not sustainable in the long term.
Conclusion
The recent close of Bitcoin above its bull market support band raises questions about its sustained growth.
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