Bullish or bearish? Analyzing Bitcoin Price with Elliott Wave

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Applying the Elliott Wave Principle can provide valuable insight into the future price action of Bitcoin, by examining and counting past wave patterns.

Each wave exhibits a unique corresponding market behavior that helps shed light on where the major cryptocurrency is in its market cycle. And according to this new analysis, that’s not where most people think. Watch the video or read more below

Understanding the Elliott Wave Principle in Bitcoin

The Elliott Wave Principle is a technical analysis tool that seeks to identify repeating patterns in financial markets. It divides price movements into waves, each representing a specific phase of market behavior. These waves follow a predefined pattern and provide clues about market sentiment and potential price targets.

In the context of Bitcoin, the Elliott Wave Principle suggests a particular wave progression and corresponding market behavior. Wave 1 marks the initial bounce from undervalued levels, indicating recognition of Bitcoin’s potential.

Wave 2 represents a retest of previous lows without establishing a new low, implying continued negative sentiment. The absence of a new low in wave 2 often results in increased participation in wave 3, which tends to be the longest and strongest wave. Positive news cycles and growing fundamentals support the wave 3 bullish momentum.

Wave 4 signals the end of the growth phase, characterized by profit-making activities. It is generally considered a disappointing wave, as valuations fail to meet investor expectations despite the enthusiasm seen in wave 3.

Wave 5 represents the latest advancement, accompanied by improved performance and fundamentals. However, it usually does not reach the same strength as wave 3. Wave 5 is often driven by psychological factors, such as fear of missing out (FOMO), leading to excessive overvaluation.

Based on the above descriptions alone, what wave does Bitcoin appear to be in?

Bitcoin matches channeling technique in chart | BTCUSD on TradingView.com What the Current Wave Count Suggests

In the video and chart above, the displayed channeling technique could project a possible wave 5 target. of the current cycle could experience an unprecedented emotional surge, contributing to a substantial overvaluation.

Claims that the Bitcoin cycle is already over based on premature assessments of market highs are refuted by the Elliott Wave principle. The projected top of the channel derived from connecting the parallel lines of Waves 2 and 4 indicates that the end of Wave 5 did not match those expectations.

Additionally, the table below explains the appropriate wavenumbers of two different types of corrections. Waves 2 and 4 usually feature an alternation, where a correction is usually a sharp zig-zag, or sideways triangle or flat correction.

A zig-zag has a lower top, while flat corrections have a higher top, much like the second BTCUSD 2021 high. This once again indicates a wave 4 correlation and an upcoming wave 5.

Alternating styles of corrections in crypto | BTCUSD on TradingView.com The Final Advance and Beyond

So what happens after the final advance? Bear markets and corrective waves under the Elliott Wave Principle are usually made up of three waves, labeled ABC.

These corrective waves aim to balance the previous impulse waves. The end point of a correction should be within the range of previous waves 3 and 4, providing a potential price range for Bitcoin’s correction phase.

The final chart below shows where Wave 5 and the final Bitcoin advance are at. According to the principle of Elliott waves, large waves are subdivided into waves of smaller degrees. Thus, identifying the completion of the current lower period correction is crucial before making any predictions about future price movements.

Lower degree subwaves suggest wave (2) of 5 is underway. Much like a higher degree wave 2, investors expect more downside and a continuation of the bearish corrective phase. When a lower low is not reached, everyone crowds into the wave (3). This indicates that there could be a lot of upside potential in Bitcoin after an extended downtrend.

The Final Advance and Beyond | BTCUSD on TradingView.com Conclusion of the Crypto Cycle

Understanding the progression of waves and their corresponding market behavior allows investors to make more informed decisions. An appropriate wave count could suggest that Bitcoin is entering its latest advance, or that it is possible that it is well advanced.

Unfortunately, a larger bearish turn in crypto is inevitable. Therefore, it is important to be patient and wait for confirmation before drawing any firm conclusions. But before that happens, BTCUSD could surprise the market to the upside until a new low is reached. Watch the video for the full explanation.

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If psychology and technical structure agree, long #Bitcoin pic.twitter.com/IQQRgJ9rpv

Tony “The Bull” (@tonythebullBTC) May 11, 2023

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