After BTC's meteoric rise to $20k in late December we've been in a steep correction for the last 6 months. In my proposed count, we are currently in the B wave of an ABC correction. Looking at the price action for the last 4 months, it seems like this B wave has developed into a descending contracting triangle, a declining top with a flat bottom (~6k). According to textbook teachings, triangles almost always appear in positions prior to the final actionary wave in the pattern of one larger degree. In this case the final actionary wave would be the C wave of the correction (down). I am inclined to believe that this is indeed a triangle we are seeing formed here.
In triangles, there are usually at least two alternative waves that are related to each other by 0.618.
Wave C = 0.618 (Wave A)
Wave D = ~0.786 (Wave B)
Wave E = ?
Assuming this is indeed a triangle that has formed and that Wave D bottomed out at $6120, Wave E should be equal to 0.618 (Wave C), which would be around the $8.3k range. If this pattern does play out we can expect another large drop in price in the final C wave of the correction. There has been a lot of speculation as to where the bottom might be and there are a lot of strong arguments for each case. Personally, if there is nothing fundamentally wrong with BTC, I believe the absolute lowest we'll see is around $2.5k (200 EMA on the weekly). A sell off of this magnitude would require a lot of bad news and FUD to be propagated by the media of course. If we are to fall below a psychological support level, I think it's a reasonable assumption that the sell off will continue to cascade into extreme lows.
As students of the Elliott Wave Principle are aware of, at any point in time there are always 2 or more valid EW counts. I'm sure there is a count that may suggest that we've already hit the bottom and it's going to be moon missions and lambos season soon. Looking at the MACD indicator we are dangerously close to crossing bearish on the monthly time frame. We appear to be on pace to cross at the end of July, and I believe we could see an apocalyptic sell off right before (in anticipation) and after we cross (after confirmation). I am biased towards bearish EW counts. We went far too high, far too fast and a correction to $6k just doesn't seem sufficient.
Only time will tell how this count will play out. If we close below $5.8k within the next few days or close well above $8.4k sometime next month, I would consider this triangle and EW count invalidated, and assess other possible counts. We've dropped from $10k to $6.1k without any significant pull back, and I think it's plausible that $6.1k could be the local bottom.
Short-term: slightly bullish ($8k)
Mid-term: very bearish ($2.5k-$5k)
Long-term: very bullish ($25k+)
In triangles, there are usually at least two alternative waves that are related to each other by 0.618.
Wave C = 0.618 (Wave A)
Wave D = ~0.786 (Wave B)
Wave E = ?
Assuming this is indeed a triangle that has formed and that Wave D bottomed out at $6120, Wave E should be equal to 0.618 (Wave C), which would be around the $8.3k range. If this pattern does play out we can expect another large drop in price in the final C wave of the correction. There has been a lot of speculation as to where the bottom might be and there are a lot of strong arguments for each case. Personally, if there is nothing fundamentally wrong with BTC, I believe the absolute lowest we'll see is around $2.5k (200 EMA on the weekly). A sell off of this magnitude would require a lot of bad news and FUD to be propagated by the media of course. If we are to fall below a psychological support level, I think it's a reasonable assumption that the sell off will continue to cascade into extreme lows.
As students of the Elliott Wave Principle are aware of, at any point in time there are always 2 or more valid EW counts. I'm sure there is a count that may suggest that we've already hit the bottom and it's going to be moon missions and lambos season soon. Looking at the MACD indicator we are dangerously close to crossing bearish on the monthly time frame. We appear to be on pace to cross at the end of July, and I believe we could see an apocalyptic sell off right before (in anticipation) and after we cross (after confirmation). I am biased towards bearish EW counts. We went far too high, far too fast and a correction to $6k just doesn't seem sufficient.
Only time will tell how this count will play out. If we close below $5.8k within the next few days or close well above $8.4k sometime next month, I would consider this triangle and EW count invalidated, and assess other possible counts. We've dropped from $10k to $6.1k without any significant pull back, and I think it's plausible that $6.1k could be the local bottom.
Short-term: slightly bullish ($8k)
Mid-term: very bearish ($2.5k-$5k)
Long-term: very bullish ($25k+)