Bitcoin: One Lower Low Cannot Be Excluded Just Yet

Sideways Price Action as Anticipated

In our previous Bitcoin update (see here), we showed, based on the Elliott Wave (EW) Principle and several external factors, that “a move slightly lower is still likely, as these events rarely mark the exact bottom, but signal the start of the bottoming process, often followed by sideways or slightly lower price action (4th wave) as a final floor is established. We do not expect it to drop much below $60,000.”

We explained that a smaller (orange) fourth-wave bounce, ideally to ~$73,000, followed by a final (orange) W-5 to the mid- to high $50K price level, was still very likely. This setup is still possible. See Figure 2 below.

In this case, the aforementioned “sideways… price action” is underway as the orange W-4 is protracting, i.e., subdividing into several smaller a-b-c waves, and can therefore reach between $74K and $83K.

The Bears must keep Bitcoin’s price below the purple warning level at $91,140 because a 4th wave can never exceed the 2nd wave of the same degree. A move above the orange 1st-wave low at $87190 would already be a serious warning that a more significant low has been reached.

An Alternative Scenario

Namely, we can shift the labeling of the late January price action to a more complex W-2, rather than a W-1, 2, i, ii scenario. See the blue box in Figure 2 below.

For this to become our primary POV, the Bulls must A) always keep price above the February 6 low of $60,069. A drop below last Tuesday’s $62,551 low will be a severe warning that lower prices await. In the meantime, B), the Bulls must push Bitcoin’s price above the potential gray W-i/a set on February 8 at $72226 to allow the gray W-iii/c to unfold to $82314.

The informed reader has, at this stage, figured out that such a breakout rally is still indistinguishable from the W-4 path we showed in Figure 1. Thus, C) the final straw to break the Bears’ camel’s back is to see the potential gray W-iv? and gray W-v? develop.

Since we cannot predict the future, we cannot yet know whether those five gray waves will materialize. We hope so, as bear markets are no fun. But we must now sit back, relax, and let the important price levels mentioned in this article guide us, as an important low has already been struck or will be soon. And don’t worry if you think you already missed the boat, which would be silly, as BTC is only up ~9% from its February 6 low. Either way, the next-best low-risk buying opportunity for those who don’t dollar-cost average will be a lower low or a slightly higher low.

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