By Elliott Wave International
Every time an obituary is written for Bitcoin, the granddaddy of cryptocurrencies manages to resurrect.
As a Jan. 25 CNBC headline noted:
Investors fear ‘crypto winter’ is coming as bitcoin falls 50% from record highs
The day before that headline published, Bitcoin had briefly dipped below $33,000, far below its November high of nearly $69,000. At that time, the entire crypto market had shed roughly $1 trillion in value since that all-time high in Bitcoin. Also around that time, Russia’s central bank had proposed banning the use of cryptocurrencies.
So, many observers were highly pessimistic about Bitcoin — just as they were around the lows of December 2018, March 2020 and June / July 2021.
However, Elliott Wave International Crypto Pro Service forecaster Tony Carrion looked at the Elliott wave pattern of Bitcoin and said this in the February Global Market Perspective, an Elliott Wave International monthly publication which provides coverage of 50-plus worldwide financial markets (Feb. 4):
The [declining] pattern is clearly corrective. A corrective pattern is countertrend to the larger trend in force.
In other words, the main Bitcoin price trend was upward.
Keep in mind that two Elliott wave corrective patterns were mentioned as alternatives at the time. Put another way, our analysis did not offer certainty about the future price path of Bitcoin. No analytical method of financial markets can promise an exact forecast. However, Tony did indicate a high degree of confidence that Bitcoin’s slide from its all-time high was countertrend (or corrective.)
As you probably know, since then, the price of Bitcoin has risen.
Indeed, on March 28, another CNBC headline said:
Bitcoin surges above $48,000, turns positive for 2022
The big question for crypto investors is: Is Bitcoin (and other cryptos) at the beginning, in the middle or near the end of a bullish run?
Elliott wave analysis continues to offer a major clue.
If you’re new to Elliott wave analysis, you may wonder why such a strong emphasis is placed on this method for analyzing financial markets, including cryptocurrencies.
Here’s why (Elliott Wave Principle, Frost & Prechter):
The Wave Principle is governed by man’s social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value. [bold emphasis added]
Again, “predictive value” does not mean “guarantee.” Having said that, Elliott Wave International knows of no other method that surpasses the utility of the Elliott wave model.
Yet, make no mistake, learning the details of the Elliott wave model does take time and effort. However, as another quote from Elliott Wave Principle suggests, it’s worth it:
After you have acquired an Elliott “touch,” it will be forever with you, just as a child who learns to ride a bicycle never forgets. Thereafter, catching a turn becomes a fairly common experience and not really too difficult. Furthermore, by giving you a feeling of confidence as to where you are in the progress of the market, a knowledge of Elliott can prepare you psychologically for the fluctuating nature of price movement and free you from sharing the widely practiced analytical error of forever projecting today’s trends linearly into the future. Most important, the Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress.
Good news! You can access the entire online version of this Wall Street classic for free.
All that’s required for free access to Elliott Wave Principle: Key to Market Behavior is a Club EWI membership, which is also free.
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This article was syndicated by Elliott Wave International and was originally published under the headline What to Make of the Bullish Resilience of Bitcoin. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.