Bitcoin Flatlined This Year. What to Expect Next?

Bitcoin Elliot Wave Technical Analysis

Bitcoin (BTC) closed off the year 2021 at $46197 and is now trading at $40297. A loss of only 12.8%, but everybody is bearish. Meanwhile, it traded as low as $32991 on January 24^th and as high as $46669 on March 28^th of this year. Essentially all of BTC’s price action this year has been contained between $35500 and $45500 with a $40500 mid-point.

From an Elliott Wave Principle (EWP) perspective, sideways markets are the hardest to forecast as it opens up many possibilities. Knowing which is the most probable becomes more of an educated guess than when the cryptocurrency is in a much more well-defined impulse-based uptrend. See Figure 1, for example.

Bitcoin had a clear defined impulse pattern going into the early-2021, blue Primary-III, high, and then a clear five-waves impulse pattern from the June lows to the November 2021 highs. According to my bigger-picture EWP work, BTC should have topped for a (pink) Cycle-3 wave and now in a Cycle-4.

In my previous update, see here, I showed if BTC was establishing a more immediate downside setup to ~$25K for wave-C4. Or if it would become more complicated because 4^th waves are notoriously tricky. I would like to deep dive into the miore complex scenario in today’s update.

Figure 1. Bitcoin Weekly charts with detailed EWP count and technical indicators.

4^th waves are often complex triangles or flats

The complex 4^th wave scenario has BTC morphing into a triangle. See Figure 1. The counter-trend rally, wave-B, is subdividing into an intricate a-b-c pattern. Black major wave-a and -b are complete, and wave-c is under this scenario underway. Ideally, it should target ~$60K and fulfill my original call from four months ago. How do we know this pattern will emerge? As long as BTC can stay above the ascending dotted blue trend line and rallies back above the late March high (dotted green line).

Bottom Line

BTC is in a multi-month 4^th wave correction of the same degree as the wave that ended in 2018 after the 2017 top. Fourth waves are tricky and can morph into at least 12 different patterns. Knowing which of these beforehand is impossible. At this stage, BTC has the setup in place to morph into a complex triangle, but it requires three things to make that happen:

1. Hold above the trendline that connects the January and February lows, and which currently resides at around $36900.
2. A close back above this year’s mid-value of $40,500. That opens up the potential to target $45,500 once again.
3. A close back above the late-March high of $46669. Then the potential larger a-b-c pattern of wave-B to ideally $60K gets triggered.

Thus the stage has been set. The conditions are in place for a complex triangle. All BTC must do is provide the triggers according to the mentioned above “three-step program.”