Why Bitcoin Could Be Ready For Its Most Powerful Rally In Years

Why Bitcoin Could Be Ready For Its Most Powerful Rally In Years

The price of Bitcoin is trading at over $28,000 per coin and is up nearly 78% year-to-date in 2023. This could be just a mere glimpse of things to come, which could be the biggest rally in cryptocurrencies in several years. – even outperforming the 2020 bull run.

Here is what the Elliott Wave Principle rules and guidelines may be telling the market about where BTC is in its market cycle.

Bitcoin and Elliott Wave Principle

The Bitcoin price bounces back and forth 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 eliminated. But this is simply natural market cycles at play.

Within each cycle, according to the Elliott Wave Principle, there are a series of five waves that move in the direction of the primary trend. These waves appear to varying degrees on all timeframes, highlighting the fractal behavior of financial markets. As a “principle”, the Elliott Wave follows certain guidelines, rules, counts and characteristics.

For example, driving waves move in fives with the trend, while each correction forms in threes against the trend. The result is a five-wave pattern with three steps up and two steps down in the middle. Odd waves move with the primary trend, while even waves move counter as a correction. This can be confusing as the individual corrections, if strong enough, can look like corrections of a larger wave grade.

A specific Elliott Wave rule states that wave four cannot enter wave one price territory. With the first wave peaking at $13,800 per BTC, an invalidation line can be drawn slightly above that level. At the bottom of the recent correction, BTC dropped as low as $15,000 but never in the path of the wave. This fact alone could indicate that Bitcoin is gearing up 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 all of the wave one rally – a typical feature of the corrective wave. Wave twos also tend to be zig-zags, and this is exactly what the cryptocurrency market has achieved.

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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 plane. Bitcoin price formed an expanded flat correction in the wave four placement. This is especially confusing on wave A of wave four, resulting in a higher high, before cutting off all support in a vicious C wave.

What remains is what should be wave five in the top cryptocurrency by market capitalization. And this is where things get more interesting. According to Elliott Wave, waves three in the stock market are the longest and strongest, while waves five 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 ready for its biggest rally in years?

In the big picture, Bitcoin is also potentially in the final wave five of a higher grade five wave cycle. This could mean there is more momentum in BTC than ever before for one last big finish before a much more brutal bear market.

follow @TonyTheBullBTC on Twitter or join Telegram TonyTradesBTC for exclusive daily market insights and technical analysis education. Note: The content is educational and should not be considered investment advice. Featured Image from iStockPhoto, Charts from TradingView.com

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