Why Bitcoin May Be Poised for Its Strongest Rally in Years
Pumped golden balloon shaped by bitcoin sign with the growing bar graph on the pink wall. (3d rendering)
Bitcoin price is trading at more than $28,000 per coin and is up almost 78% year to date in 2023. This could be just a glimpse of what’s to come, which could end up being the biggest rally in crypto in years – even beating the performance of the bull run in 2020.
Here’s what the Elliott Wave principle rules and guidelines can tell the market about where BTC is in the market cycle.
Bitcoin and the Elliott Wave Principle
Bitcoin price ebbs and flows between phases of extreme irrational exuberance and fear. During uptrends, the top cryptocurrency goes on record rallies. In downtrends, up to 80% or more of the upside is wiped out. But these are simply natural market cycles at play.
Within each cycle, according to the Elliott Wave Principle, is a series of five waves that move in the direction of the primary trend. These waves appear to varying degrees across all timeframes, highlighting the fractal behavior of financial markets. Because it is a “principle”, the Elliott Wave follows certain guidelines, rules, counts and characteristics.
For example, motive waves move in fives with the trend, while each correction forms in threes against the trend. The results are five wave patterns with three steps up and two steps down in between. Odd-numbered waves move with the primary trend, while even-numbered waves move inward as a correction. This can be confusing, as individual corrections, if strong enough, can feel like corrections of a larger magnitude.
A special Elliott Wave rule states that wave four cannot enter the price range of wave one. With wave 1 peaking at $13,800 per BTC, an invalidation line can be drawn slightly above this level. At the very bottom of the recent correction, BTC fell to $15,000, but never in the way of the waves. This fact alone could indicate that Bitcoin is preparing for its wave five and final wave for this cycle.
BTC is following Elliott Wave Principle rules and guidelines | BTCUSD on TradingView.com
Will the Cryptocurrency Market Follow Commodity Guidelines?
Additional Elliott Wave guidelines suggest that corrections alternate between sharp and sideways, short or long. Wave two erased almost the entire wave 1 rally – a typical characteristic of the corrective wave. Wave twos also tend to zig-zag, and that’s exactly what the crypto market got.
Wave three cannot be the shortest, so it makes sense that the rally in 2020 and 2021 was much longer than wave one. Wave four corrections are usually a triangle or a flat. Bitcoin price formed an extended flat correction at the wave four location. This is especially confusing at the A wave until wave four results in a higher high, before cutting through all support in a vicious C wave.
What remains is what should be wave five in the top cryptocurrency by market cap. And this is where things get most interesting. According to Elliott Wave, wave threes in the stock market are the longest and strongest, while wave fives are the most powerful in commodities. With BTC considered more of a commodity than anything else – even by the SEC and CFTC – could Bitcoin be poised for its biggest rally in years?
In the bigger picture, Bitcoin is also potentially in the final wave five, of a larger five-wave cycle. This could mean there is more strength in BTC than ever for one last grand finale before a much more brutal bear market.
If wave 5 inches #Bitcoin is the strongest due to being more commodity-like in nature, what happens during wave 5 of V?
We’ll find out soon enough. pic.twitter.com/NxocaUKMWN
— Tony “The Bull” (@tonythebullBTC) March 21, 2023
