Is the Bottom in for Bitcoin?

Corrective Rally Since the November 21 Low?

In our update from late November (see here), we showed based on the Elliott Wave (EW) Principle, why we were still Bullish on Bitcoin in that “an ongoing corrective 4th wave targeting $86-101K from which a rally to $164-216K can still occur. [However], comprehensive, multifaceted analyses of the yearly, monthly, and daily charts indicate the potential for further decline to around $74000 ± 2000 before moving higher.”

So far, Bitcoin has risen 7% since our last update. It fell to $80562 on November 21 and has since climbed to today’s high of $94167. Additionally, the current percentage gain (18%) is more impressive, as the October bounce was only 12.5%. But the key question remains: has the bottom been reached?

The rally since that low has been overlapping and can thus be considered a corrective A-B-C move: a minor 4th wave. See Figure 1 below.

Since BTC nearly bottomed at the 161.8% Fibonacci extension at $79730, matching the ideal third-wave target, the (gray W-iv) target is usually at the 100.0% Fibonacci extension at $93717. However, nothing prevents Bitcoin from extending slightly further into the orange-blue target zone at $ 98K-$104K. Still, if its price moves above the gray W-i low at $103552 made on October 17, the odds increase significantly (>60%) that the larger correction has already ended. See Figure 2 below.

Or Is It a Set of 1^st and 2^nd Waves?

Specifically, the price movement since the November 21 low has shown a bullish trend of higher highs and higher lows, which can be seen as a series of nested first and second waves: gray W-i, ii, and orange W-1, 2. The gray W-iii of the green W-1 (of the red W-v, etc.) might now be beginning, either as a five-wave impulse or an A-B-C pattern forming a leading diagonal green W-1. This pattern depends on BTC staying above at least $87705, and especially $83828.

Thus, at this stage, Bitcoin’s price action remains somewhat uncertain but will eventually trend higher, whether that happens immediately or after a final low around $78000 ± 2000, as also suggested in our previous update. We’ll find out soon, as the Elliott Wave analysis has prepared us for either scenario. Finally, understanding that financial markets tend to fluctuate—especially in the short term, which is usually more volatile than the long term—shifting between periods of clarity and periods of less clarity is essential. We are currently in the “less clear” phase, and we can be confident that clarity will return soon.