Bitcoin is surging again. The cryptocurrency is approaching $16k in a rally reminiscent of the late-2017. Near-zero interest rates make speculative instruments such as Bitcoin very appealing. The BTC-as-an-inflation-hedge narrative is also helping the bulls right now with the Fed and ECB pumping cash into the financial system.
But Bitcoin is far from a true safe-haven. Its price swings can be quite spectacular in both directions. Hence, in order to extract anything from it, investors need to have an idea of its future direction. Given Bitcoin’s lack of intrinsic value, Elliott Wave analysis seems to be the most effective tool.
The chart above first appeared in our premium analysis as an alternative count on March 29th. With Bitcoin slightly above $6000, it suggested a run to $16 000 in wave C was possible following a complete 5-3 wave cycle in waves A and B.
Wave A was a clear five-wave impulse, labeled 1-2-3-4-5, while wave B looked like a simple a-b-c zigzag. Wave “a” of B was a leading diagonal. Just after the March collapse to $3850, however, betting big on this count wasn’t worth the risk. The bulls persisted, though, and by July they’ve made it clear they mean business.
The chart above was sent to subscribers on July 12th when BTCUSD was hovering around $9300. It revealed that the recovery from $3850 to $10 429 was an impulse, marked i-ii-iii-iv-v in wave 1. This signaled that wave C was in progress and the drop to $8831 in late-June was likely wave 2.
This meant higher levels in wave 3 of C should be expected. And indeed, Bitcoin climbed to $12 473 in August, but was back down to $9825 a month later. So, on September 20th, we sent the following update to our subscribers.
Even when the analysis is correct, traders cannot expect the price to move in a straight line towards their target. The price of Bitcoin proved that once again. Instead of moving sharply in wave 3, it chose to draw a notable correction in wave ii of 3 first.
Is it “Different this Time” for Bitcoin Investors?
Nevertheless, it didn’t drop below the starting point of wave “i”, which left the bullish outlook alive. As BTCUSD was approaching $11 000, we identified $9813 as the invalidation level for this count. If a drop below this mark occurred, the bulls could no longer be trusted. The next chart shows how the situation developed.
The price remained in a range for a while, but $9813 was never breached. The uncertainty surrounding a possible second lockdown in Europe and the upcoming U.S. election added fuel to the bullish thesis. As time passed, the number of buyers increased steadily. Earlier today, Bitcoin rose to $15 969, virtually reaching the initial target identified in late-March.
In the meantime, COVID-19 is still the biggest issue facing humanity today and the U.S. election remains undecided as of this writing. One thing is certain though – uncertainty is the norm in life, not the exception. It is the illusion of certainty that periodically sets in for some time. So, with Bitcoin closing in on a new all-time high, one question remains: is it different this time?
What will BTCUSD bring next week? That is the subject of discussion in our next Elliott Wave PRO analysis due out late Sunday!