Bitcoin Lengthening Cycles Are Dead, Says Bejamin Cowen; the end of a great story?

Benjamin Cowen, one of the most popular and respected analysts in the cryptocurrency market, has admitted that his flagship market model “is dead”. He made the remarks in the context of the fall in the price of Bitcoin, while also challenging the hypothesis he had been defending since 2019.

Benjamin Cowen is one of the most popular analysts, commentators and youtubers in the field of crypto assets, especially Bitcoin. His profile Twitter has 636,000 subscribers, while his YouTube channel has 734,000 subscribers.

Cowen’s particular social media management style is marked by no revenue from YouTube ads or the promotion of third-party services (exchanges, services, brands, or crypto tokens). His outspoken, minimalist approach — he’s been recording his videos in a room with two chairs, a cardboard desk and a laptop camera for years — and highly critical has earned him a huge fanbase.

“Lengthening Cycles Are Dead” vs. BTC Stock-to-Flow

One of the main hypotheses on which he built his popularity is his theory of the existence of Bitcoin elongation cycles. This hypothesis suggests that:

  1. In the Bitcoin market, there are cycles of accumulation, a dynamic uptrend and a sharp decline,
  2. Successive cycles last longer,
  3. Successive cycles produce diminishing returns (ROI),
  4. A long-term model of the BTC market are logarithmic regression bands, the upper border of which determines the peaks (tops) and the lower part – the bottoms (bottoms).

Benjamin Cowen has been a strong proponent of this hypothesis since at least 2019. A strong believer in the model, its validity, and its application, it therefore best matches historical data. In August 2021, Cowen spoke at length with another influential analyst, PlanB, the creator of the Bitcoin Stock-to-Flow (S2F) model.

It is widely believed that the S2F pattern collapsed at the end of 2021, as the price of BTC deviated sharply downwards. Or at least, as explained Plan B himself, the so-called Floor Modelwhich assumed that Bitcoin would reach a price of $100,000 in December 2021, crashed.

After the (at least partial) collapse of the S2F model, many investors and crypto enthusiasts turned to the Cowen lengthening cycle model. It seemed that the target range of $100-200,000 was still achievable for Bitcoin, but would be reached after a bit more time. This narrative had been backed up by various arguments like the increasing market capitalization of the crypto sector, a longer time horizon for institutional investors, and a sentiment HODL long-term.

The fall of the model

Unfortunately, on May 8, this model also collapsed! The creator and biggest proponent of the lengthening cycles model, Benjamin Cowen, tweeted briefly but tellingly. In two short sentences, he admitted that the model he had been working on for years was “dead.” At the same time, he sweetly added that he “hopes this is a signal of a macro background, but I don’t think it is”.

Is it really over for Benjamin Cowen’s model?

A nice discussion took place in response to the tweet. Benjamin Cowen himself wrote a remarkwarning in advance that even a new all-time high (ATH) before the next halving will not change his conclusion:

“Even if we hit a new ATH before the next halving, that doesn’t change the brutality of the current bear market.”

The reason for this assertion is the continuous decline in the price of Bitcoin. The analyst believes that it can no longer be treated as a deep correction within the macro bull market. Although in November 2021 he himself argued that the $69,900 level was not Bitcoin’s cycle high, now he is not shy about disproving his own beliefs. He additionally has added :

“Even if #Bitcoin stabilizes at summer 2021 lows (which is honestly a big if), anything after that would be more like a new cycle.”

Source: Twitter

In the comments section, many proponents of the longer cycles hypothesis were amazed that Benjamin Cowen was abandoning his line of direction. Others asked for details or tried to prove that this wasn’t the end and the model was still correct. However, the vast majority expressed words of support and admiration for Cowen’s honesty and self-criticism. One of them, @RKrupa_Officialhas writing :

“What’s amazing about you is the fact that you’re never afraid to admit you were wrong instead of pushing the same narrative. I admire that!”

On the other hand, an interesting summary was published by the user @CardanoHumpback. He simply stated that cycles never existed and the Cowen and PlanB models were just theories unable to predict the future. According to him, “#crypto will survive as usual”.

Bitcoin’s Diminishing Returns and Log Regression Remain

However, not all elements of the Cowen model should be squeezed out with the falsification of the cycle lengthening hypothesis. In a tweet Later, the analyst said he “doubts anyone would debate” Bitcoin’s diminishing returns thesis in future cycles. He added :

“Four consecutive cycles where diminishing returns have occurred.”

Another element of the Cowen model that still proves valid and has a huge margin for BTC price movements are the logarithmic regression bands. In the updated version and tweeted From this chart, we see that Bitcoin price is approaching the upper boundary of the green band. Historically, entering this range has been a bear market confirmation.

Source: Twitter

However, due to the ascending nature of the logarithmic regression line, staying in the green range was not necessarily associated with a further decline in the price of BTC. Both in 2012 and 2015, the moment to enter the green range seemed to be the start of a long-term consolidation.

Bitcoin: Close to a macro floor?

During this consolidation, the price of Bitcoin did not experience such sharp drops as it did after the peak. In contrast, reaching the bottom of the green band in the following months was caused not so much by the capitulation of bitcoin holders but by the rise of the logarithmic band.

If a similar situation were to occur in the coming months, then perhaps Bitcoin would indeed be on the verge of a macro low. Still, we are witnessing the end of Benjamin Cowen’s Bitcoin market grand narrative, which has been valid for years.

However, perhaps the tampering with its flagship model isn’t a dramatic development. For years, this has been a way to streamline and navigate the highly volatile and somewhat wild cryptocurrency market. From now on, its rejection may allow players in this young financial world to enter a new, more mature phase. Like Cowen himself often remindsand PlanB also in his twitter profile description sentence:

“All models are wrong. Some are helpful.”


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