Bitcoin price is trading at more than $28,000 per coin and is up nearly 78% year-to-date in 2023. This could only be a mere glimpse of what’s to come, which could ultimately be the biggest rally in crypto in several years – even beating the performance of the 2020 bull run.
Here is what Elliott Wave Principle rules and guidelines could be telling the market about where BTC in its market cycle.
Bitcoin And Elliott Wave Principle
Bitcoin price ebbs and flows between phases of extreme irrational exuberance and fear. During uptrends, the top cryptocurrency goes on record-breaking rallies. In downtrends, up to 80% or more of the upside is then wiped out. But this is simply natural market cycles at play.
Within each cycle, according to Elliott Wave Principle, are a series of five waves that move in the direction of the primary trend. These waves appear in varying degrees across all timeframes, highlighting the fractal behavior of financial markets. Because it is a “principle”, 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 is five wave pattern with three steps up and two step down in between. Odd-numbered waves move with the primary trend, while even-numbered waves move against in as a correction. This can be confusing, as individual corrections, if strong enough, can feel like corrections of a larger wave degree.
One particular Elliott Wave rule states that wave four cannot enter the price territory of wave one. With wave one topping out at $13,800 per BTC, an invalidation line could be drawn slightly above this level. At the very bottom of the recent correction, BTC fell to $15,000, but never into wave one’s path. This fact alone, could indicate that Bitcoin is gearing up for its wave five and final wave for this cycle.
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 all of the wave one rally – a typical characteristic of the corrective wave. Wave twos also tend to be zig-zags, and that’s exactly what the crypto market got.
Wave three cannot be the shortest, so it makes sense that the 2020 and 2021 rally was much longer than wave one. Wave four corrections are usually a triangle or a flat. Bitcoin price formed an expanded flat correction at the wave four placement. This is especially confusing at the A-wave of wave four results in a higher high, before slicing through all support in a vicious C-wave.
What’s left is what should be wave five in the top cryptocurrency by market cap. And here’s where things get the 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 commodity than anything else – even by the SEC and CFTC – could Bitcoin be ready for its biggest rally in years?
In the bigger picture, Bitcoin is also potentially in the final wave five, of a larger degree five-wave cycle. This could mean that there is more strength in BTC than ever for one last grand finale before a much more brutal bear market.
If wave 5 in #Bitcoin is the strongest due to being more commodity-like in nature, what happens during wave 5 of V?
We are going to find out soon enough. pic.twitter.com/NxocaUKMWN
— Tony "The Bull" (@tonythebullBTC) March 21, 2023