Last week we saw the digital gold "Bitcoin" market capitalization launch into the trillion-dollar stratosphere, creating history for yet another week as institutional acceptance continues to grow.
Bitcoin skyrocketed to nearly $20,000 in late 2017 before losing more than 80% of its value the following year. Bitcoin believers say that, whereas the 2017 bubble was driven by retail speculation, the current cycle is being fueled by demand from institutional investors.
The question on most investor's minds is where does Bitcoin head next? It is vital to state no one knows for sure all we can do is build a thesis. So let's take a look at the Bitcoin exceptional rally from the Elliot Wave perspective.
The BTCUSD weekly chart above reveals that the market has been advancing impulsively and tracing out a five-wave pattern from its March 2020 low of ~$3837. This pattern is labeled 1-2-3-4-5 and sub-waves of wave 3 are also visible labeled (i)-(ii)-(iii)-(iv)-(v).
Is this a good time to join Bitcoin bulls?
According to the theory, a three-wave correction follows every impulse and typically erases the entire fifth wave. Attempts to pick the top are never a good idea. Suffice to say that once wave (v) of 3 is complete most likely within $60,000 and $66,000 range, Bitcoin can tumble to $33000 or lower in wave 4.
Bottom Line
If this analysis is correct, we can expect a drop of about 30-50% in Bitcoin before the next rally in wave 5. The ascending trendline which can act as a magnet for the price during a correction also lined up with $32723 demand zone. After enjoying over 100% rally in just two months of 2021, the world's largest digital currency by market value appears too expensive now.
What's your view on Bitcoin? Let's know in the comment.
Bitcoin skyrocketed to nearly $20,000 in late 2017 before losing more than 80% of its value the following year. Bitcoin believers say that, whereas the 2017 bubble was driven by retail speculation, the current cycle is being fueled by demand from institutional investors.
The question on most investor's minds is where does Bitcoin head next? It is vital to state no one knows for sure all we can do is build a thesis. So let's take a look at the Bitcoin exceptional rally from the Elliot Wave perspective.
The BTCUSD weekly chart above reveals that the market has been advancing impulsively and tracing out a five-wave pattern from its March 2020 low of ~$3837. This pattern is labeled 1-2-3-4-5 and sub-waves of wave 3 are also visible labeled (i)-(ii)-(iii)-(iv)-(v).
Is this a good time to join Bitcoin bulls?
According to the theory, a three-wave correction follows every impulse and typically erases the entire fifth wave. Attempts to pick the top are never a good idea. Suffice to say that once wave (v) of 3 is complete most likely within $60,000 and $66,000 range, Bitcoin can tumble to $33000 or lower in wave 4.
Bottom Line
If this analysis is correct, we can expect a drop of about 30-50% in Bitcoin before the next rally in wave 5. The ascending trendline which can act as a magnet for the price during a correction also lined up with $32723 demand zone. After enjoying over 100% rally in just two months of 2021, the world's largest digital currency by market value appears too expensive now.
What's your view on Bitcoin? Let's know in the comment.
